Cash in reserve???

Discussion in 'Credit Talk' started by SoParkDiva, Aug 26, 2003.

  1. SoParkDiva

    SoParkDiva Well-Known Member

    Is anyone familiar with this? I plan to buy a home for $180,000 using a interest-only 100% no money down loan. My payments will be approximately $825 a month plus association fees.

    But in order to get this loan I have to have 6 months' payments in the bank. That's $5,000 just sitting in the bank. If I had that cash then I would use it as a down payment. Why would I want a 100% loan if I had $5,000 to splurge?
  2. EdG

    EdG Well-Known Member

    My loan is a "No Doc" interest only loan. Originally my lender said I needed 3 months reserves, he forgot that I was going no doc. A week later he told me I needed 6 months reserves. Their are programs that only require 3 month reserves, ask your mortgage person.

  3. jlynn

    jlynn Well-Known Member

    They want to make sure if something happens to you, illness, loss of job, etc. that you have money in reserve to make the payments.

    When I was in RE, most required 3 months. Could be because its interest only, or could it be because times have changed? That I don't know.

    Do you have 401K's or anything like that? I believe that will count.
  4. faztcobra

    faztcobra Well-Known Member

    I'm pretty sure it does. When applying for my loan, I was asked if I had a 401k and how much was in it. They also consdired my pension plan as well. Although, pension may not work for everyone. My pension is a Cash Balance pension. For ANY reason that I leave the company...get fired, sick, quit, etc...the money is instantly mine, minus taxes unless I roll it into another investment plan.
  5. cinderella

    cinderella Well-Known Member

    I did a No Income Doc loan/stated assets loan with a cash out refi at 80% LTV for my dh's dad this year, I had to show 9 months of reserve. There was still over $100k equity in the house after the loan and my scores were above 700.

    The lender is only protecting themselves by asking for reserves, especially with no down borrowers.
  6. SoParkDiva

    SoParkDiva Well-Known Member

    Yes, I have a 401k and it will count. But it doesn't contain $5,000.
  7. jlynn

    jlynn Well-Known Member

    Are you a joint account holder with anyone? I happened to be on my gmother's account when we bought a house (I wouldn't dream of touching her money!), and they counted that towards my reserves.
  8. SoParkDiva

    SoParkDiva Well-Known Member

    Re: Re: Cash in reserve???

    That's a good idea. Well, I spoke to the banker and told her basically I have 3 months payments in reserves. She said, "I'll call you back." Haven't heard from her since. Oh well. :/
  9. RichGuy

    RichGuy Well-Known Member


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