Consumption and Real Estate
Bank refused fixed rate mortgage due to low reserve funds?
Question : Bank refused fixed rate mortgage due to low reserve funds?
A family member was turned down for a mortgage due to low reserve funds. They make plenty of money, credit ratings were fine, and they had the 20 percent down payment. However were told they needed more in their reserve funds in order to get a fixed mortgage or they had to pay 25 percent down? Since when is this required? I have never heard of this.
fixed mortgage
Best answer:
Answer by nusias9
I never heard of this either.. Reserve funds for the bank itself or for the association (town home, condo, neighborhood)?
banks have a reserve for themselves to protect against default loans.. I’m not sure what you mean. However, they are changing tons of loan requirements.. so it could be entirely new policy.
You know 25% is not really that unusual as a down payment.
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#2 written by Expert Realtor 1 year ago
All loans require reserve funds. I can’t believe people are posting on here, that have had mortgages, that have never heard of this.
It is STANDARD banking practice.
Usually 2 to 6 months, minimum. It doesn’t have to be cash, it can be 401K or other investments…only proof of assets is needed.
My advice? Try another bank…they can put less down and have more reserve funds.
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#4 written by col. Kurtz 1 year ago
TSK, TSK TSK…. You are being lead astray by a lousy RE Team!! Depending on the state you live in, unless you’re in a very expensive city, you should be able to buy a house w/only 3.5% dn pmt!! About the reserves, if memory serves, I believe are minimal: something like 6mos of property taxes and hazard insurance at most!!
I’m STILL a big believer in using leverage to purchase your first property. The difference in monthly payment between the smaller vs. larger dn pmt is minimal! After making your 3.5% dn pmt, keep the balance of your cash in the bank for emergencies, NOT furniture, NOT vacations but legitimate emergencies!
You wanna be a real smart 1st Time home buyer?? Use the FHA loan to buy 2 units. You will have someone, a tenant, helping you pay for your retirement planning. Sure I know you want your privacy and all that but what the hell? If your slummin’ on this board instead of talking to a CPA or Financial Planner its cuz you should be taking this advice!
It will become a part time job, but you will be supplementing your retirement income in 15-20yrs from now! After a few years you can borrow money from the equity your tenants build up for you and you can by the “White Picket” fence home you “deserve”!!
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Are they buying a primary residence or an investment property?
If it’s a primary they can get around this by puting less money down.
Let me know if you have more questions.