401K or Retirement Accounts:
It is important to provide documentation about
your retirement accounts or 401K programs because
this is another asset you could draw upon as reserves
in case of a problem. It is also another way to
show you have a savings history. Just provide
a copy of your most recent statement to your lender.
Many people use these accounts as a source of
funds for their down payment, too. Some employers
allow you to "cash out" a portion of
the 401K and some allow you to borrow against
it. Be sure to keep copies of all paperwork involving
the transaction. If they cut you a check, be sure
to make a photocopy of that, too, including any
receipt for deposit into your personal bank account.
If you are borrowing against your 401K, some
lenders will count this as an additional debt
to go along with car payments, credit cards and
other obligations. This may seem kind of silly
because you are borrowing your own money, but
from the lender’s viewpoint it is still
a monthly obligation that you must come up with
and should be taken into account. If you are "tight"
on your debt-to-income ratios in qualifying for
a home loan, this could be an important consideration.
It may affect whether you choose to cash out the
account and pay any tax penalty, or simply borrow
against it.
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