Posted on: 26th Mar, 2008 07:51 pm
I am applying for an FHA loan I though I had plenty of reserves from my 401k, but it was all company contributed none of my own. So my underwrited said it could not be used for that reason. I let a friend borrow money and they paid me back, now I have reserves but how do I document this so it want get kicked out?
Documenting the money will be very difficult since I'm sure you didn't have anything in writing, sign and notarized. Will you be receiving a tax return refund? You can document this and use it as reserves, but why do you need reserves? FHA does no't require reserves, but it does give you a better chance of being approver if you have reserves.
May be the particular lender requires him to have the reserves. But John is it fair to do so? I mean when the FHA loan guidelines say it's not required, can any lender impose it because he has has to follow certain guidelines for his own business?
There are no reserve requirements for one and two-family unit residences for FHA insured mortgages. Three months reserves are required for three and four-family unit residence's. However, this rule is dictated by the lender. If you can document the monies by promissary note or that the money came from the person back to you. Be certain that you ask the person if you did not write a promissory note to go to his bank and get his bank statement with the money coming out and your statement with the money going in this should suffice as documentation. Lenders must protect their investment by imposing guidelines outside of the insurers guidelines it is called due diligence. Just make sure your loan guy or gal is savvy enough to tackle the lenders guidelines so that you can have a smooth closing.
Yes i would seek another source that won't require reserves since they are not truly required.
If you want to justify the money you received from the person you lent it to, just have him show a statement where the money is coming out of his account, and you provide as statement showing your deposit. Then you work out an agreement on paper and both sign it. You can have a notary sign it if possible to help.
That shouls solve your problem.
If you want to justify the money you received from the person you lent it to, just have him show a statement where the money is coming out of his account, and you provide as statement showing your deposit. Then you work out an agreement on paper and both sign it. You can have a notary sign it if possible to help.
That shouls solve your problem.
