401 – MRF

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    I was wondering at what point should you take your buy-down amount out of your 401K. We don’t have a payment shock, all paperwork has been uploaded, and our intake meeting is in about a month. We’re hoping to get the go ahead and qualification after that meeting.

    Would you recommend getting it now now so that it’s already in our savings account?



    Hello knikoleellis,

    The Qualification Workbook notes:

    Documentation of other assets is important if used for the MRF and/or NACA Buy-Downs. These funds must be deposited into your bank account before NACA Credit Access review and remain there through bank application and closing:
    • 401K Assets (or Other Assets) – A copy of the 401K withdrawal and repayment terms if applicable.
    • Gift Funds – An official gift funds form is to be completed and a letter from the gift giver stating the relationship to you (it must be from a relative, spouse or fiancé), the gift givers contact name, phone number, address, a statement that it is not to be repaid, and the property address of the home being purchased.
    • Tax Refund Monies

    So it’s okay to move the money over now, but definitely not necessary yet as long as you can document the funds are in your 401K and that you are able to access the money for the prupose of buying a home (not all 401K’s allow that).

    Actually, I suggest waiting until after January 1st to move the money anyway. That way you avoid any tax implcations of withdrawing the money and not using it to buy a home in the same calendar year. Anytime after that should be okay.

    Tim Trumble
    Online Operations, NACA

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