401K Withdrawal Question

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  • #50245

    Hi All,

    Here’s the situation, I need to make a withdrawal from my 401K to use as buy down in order to qualify for the amount that I need to purchase the home that I want. The issue that I’m having is Net Fidelity requires the loan estimate to list the amount that I need for buy down. I have read on the forums that you don’t get the loan estimate with buy down listed on it until you get to the bank app stage. My question is how can I get pass credit access to get to the bank app stage, if I don’t have the funds in my checking account? I need to get to the bank app stage in order to get the loan estimate to withdraw the funds, but I can’t get pass credit access without already having the funds in my account. I do have the MRF in my checking account but not the amount needed for buy down. Has anyone else experienced this issue? If so, how were you able to work this out?

    #50248
    TTrumble
    Member

    Hello 2019homeowner,

    Pretty simple actually. You will need to provide a written statement from Net Fidelity (a letter from them and/or a copy of the 401K program rules) which states that Net Fidelity requires the loan estimate to list the amount that you need for buy down. You will also need to provide a current account statement that shows the money is in fact there in the 401K account. Write a Letter of Explanation to go with it, and get it all into your file. Make sure your counselor also notates it in your file very clearly and in detail.

    That should get you over that hurdle.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    • This reply was modified 1 year, 7 months ago by TTrumble.
    • This reply was modified 1 year, 7 months ago by TTrumble.
    #50250

    Hi @ttrumble@naca.com,

    Thanks for the quick response and all of your help both on and off the forum, it is greatly appreciated!

    #50252
    Nelsont
    Member

    Also check your plan rules. Each plan is specific to what the employer wants their employees to be able to do. Often plans have different types of loans available. Regular loans which may require little or no documentation and loans designed for home buying down payments. These often come with much longer repayment terms like 10 years and also probably require the home loan estimate and other documentation like you are being asked of. Usually if you take out a regular loan it should be very quick and easy.

    Are you looking at taking out a 401k loan or a 401k withdrawal? There is a distinct difference. A withdrawal counts as taxable income so you will end up paying for it next year when you do your taxes. Depending on how much you withdrawal you will likely have a negative tax return (owe taxes). I would advise against a withdrawal unless you can’t afford the automatic payroll deduction repayment. And depending on how much you are looking for it might not be worth it. Just something to think about.

    #50323
    srsmith
    Member

    Hello I am also I the same boat with Fidelity NetBenefits. I got qualified looked for a home made an offer got an inspection and was waiting on the counter for seller to fix repairs or tell me which repairs they would not so I could go to HAND. All the while my credit access is pending. I met all of the conditions. Then it was said that I didnt have the mrf in my account. I never recieved a document saying what the exact amount was that I had to have so I thought I was ok. I tried to do a 401k withdrawal for the rest but my original loan estimate included the sellers 3percent buydown and made me have a negative number on the document so Fidelity denied me. I need a loan estimate with closing cost and buy down listed separate so I can withdrawal. MC seems like she doesn’t want to help me in this situation and my credit access got denied. I am trying to figure put how to get some of my 401k funds liquid in my account so I can resubmit to Credit access. My lease is up in September and I am running out of time. Please help!

    #50326
    Nelsont
    Member

    Are you trying to do a 401k loan or a true withdrawal from your 401k. There is a difference.

    You should have an idea of your mrf because 1. You should get an estimate at intake 2. You should get an estimate at qualification 3. It should be listed on every action plan you get.

    There is also a calculation to figure rough estimates of mrf which is in your workbook and on your action plan. You need up to 10 months taxes plus a full year of home owner’s insurance plus a few other things. 3 to 6 months piti would be a safe guess for total mrf.

    With that said IF you withdrawal exactly what you need you may be out of luck. The underwriters and your MC will not let you use all of your savings. They want to see at least 2 to 3 months piti more than your mrf plus buy down in order to have a rainy day fund. In other words if your mrf is 5000 and your buy down is 5000 for a total of 10000 be prepared to have closer to 15000 liquid in your bank account when you go for credit access.

    #50327
    srsmith
    Member

    I am trying to do a withdrawl. I have way more than mrf in my 401k and I have alot of my money liquid in savings. I just need to withdraw a small amount. I have never been given any estimate other than the loan estimate but it lists the biydown as seller credits so fidelity is denying it because the total is listed as a negative number. It is not listed as buydown. My seller is paying 3 percent buydown. No rough estimate has been given to me. And my action plan does not list. My mc is not returning my emails and she is beating around the bush. She keeps asking can I get a gift. I dont need a gift I need my 401k. I have no one to get a gift from anyways. I only need a small amount to withdraw. If I withdraw over I will have more than enough and also leave a significant amount in my 401. My real problem is that no one will tell me what the exact amount is so I can move accordingly.

    #50328
    Nelsont
    Member

    What’s in your 401k has zero relevance to your mrf.

    Your mrf plus buy down plus rainy day fund needs to be in your checking account.

    Is there any reason you want to do a withdrawal and not a 401k loan? A withdrawal will require more paperwork and result in owing taxes next year.

    A loan will count against your DTI but you can get one if your plan allows without any paperwork.

    #50329
    srsmith
    Member

    What I was told the MRF would be back in May and what they told me they were this month are two different things. No I do not want to take a 401k loan. My company has no penalty to take a withdrawal for a home purchase. And the paperwork is literally 1 page long so no biggie there..But NACA did not give me the adequate info documented on paper to proceed. The loan estimate I was given included the buydown in buyer costs which is not correct. My seller is paying the buydown. And I have the money for closing. but I was short because of the number I was given at first. The loan estimate I was given shows a negative number like I am going to come out with a check at the end of closing and that is not the case. All I need to know is how to get my file restarted. All of my documents have been deleted online. P and S, Inspection, property specific form, addendums, and my last 3 months check stubs and statemnts are all not showing in my file. WHAT DO I NEED TO DO TO RESUBMIT TO CREDIT ACCESS besides showing my mrf in the bank?? My councelor is not answering calls or emails.

    #50333
    Nelsont
    Member

    Ask to speak to the office manager.

    Your mrf will always be an estimate even at credit access until you get your final clear to close which in my case was 12 hours before I closed.

    The negative loan estimate number is not unusual. You do get money back. Especially if you are using the buy down option. In my case it just meant I needed less for the buy down. But again I found this out hours before closing.

    You shouldn’t rely on your web file for information. You should have hard copies of everything. And your agent too. My agent was not a Naca agent. I was his first naca client but he had duplicate hard copies and emails of everything I had and was even more active than I was in speaking with naca.

    But as far as the withdrawal your company doesn’t penalize you the IRS does. It’s a federal requirement. All withdrawals from any retirement account including 401k prior to age 59 and a half are subject to a 10% penalty paid at next year’s return and the amount you withdraw from a 401k or traditional IRA is considered taxable income which is added to your total wages because 401k and IRA deductions are pre tax.

    #50344
    srsmith
    Member

    My MC is still not answering any calls or emails. It has been 6 days! I have called member services and all they say is talk to the MC. But I cant bc she is not replying to anything. How can I get the ball rolling to resubmit to credit access. All my funds are in the bank now.

    #50345
    Nelsont
    Member

    Call your local office. Ask the representative to see if mc is available. If not ask to speak to the office manager.

    You should also have your MCs email address. Email your MC and copy your web file address “email[naca ID]@nacalynx.com”. Have your agent be as active as you are. You need to be a polite pest.

    #50346
    Nelsont
    Member

    Bottom line is unless something urgent comes up you probably won’t get much communication until your MC has information to report back to you. Make sure you submit your paperwork when emailing not just asking questions.

    #50347
    srsmith
    Member

    I have dine all of the above. There is no manager in the office. Just 2 counselors and a front desk lady. I have sent several emails to here and even called member services. My agent has also called and I have called and left messages and even asked for a meeting. I have been submitting documents as I have been before all of this happened trying to keep my file updated.

    #50350
    Nelsont
    Member

    You are doing the right things. I hope it works out for you.

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