LendingClub to the rescue or nah?

Starting Out
10yFollow

LendingClub to the rescue or nah?

Earl Jornales
Beaverton, OR · Member since 2016 · 11 posts · 2 votes

So if I got an IRA and set that up with the max contribution for the year, would lenders be able to consider the money in that IRA as the necessary requirement of having 3 times the mortgage value post-closing? I don't really have IRA and I can sense some people are already shaking their heads at that. I've been told that I need money 3 times the mortgage left over in order for the lenders to feel good about the mortgage.

I'm considering crowdfunding some money from lendingclub to create a Roth IRA and max that up for the year. I've seen a few posts around Prosper and LendingClub being okay for investment purposes, but they might have been old and are people not using it this way? It will likely create a dent to my excellent credit score, which I can probably repair by October or December. My goal is to have the ability to pounce on my first investment opportunity should I see it. What sounds good for this situation?

0Reply
15 views

4 Replies

Jump to latestLatest
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    10y

    I heard they are fine, but I would check out Brelion. We had some luck with them in the past.

    Check them out at www.Brelion.com.

    0Reply
  • Earl Jornales
    OP
    Beaverton, OR · Member since 2016 · 11 posts · 2 votes
    10y

    I did a lookup and Brelion doesn't seem it will suit my end goal, which is to own and occupy a multifamily.  I currently live in an apartment paying rent, so I'm only trying to flip my situation at the moment.

    0Reply
  • Stephen Chittenden
    Rental Property Investor · Gambrills, MD · Member since 2014 · 372 posts · 88 votes
    10y
    The reserve requirements, which is what you are discussing, are based on the monthly mortgage payment. These requirements vary from lender-to-lender, although for small multi family resident (4-units or less) and single-family, many lenders will use the Fannie Mae and Freddie Mac requirements as they plan to resell the mortgage. Other lenders who will hold and service the note in-house may be more flexible. The requirements have historically been measured in terms of months of reserves and varied from 0-6 months depending upon credit, down payment, and other factors. They are moving now to a percentage of the mortgage value as opposed to months, but the amounts are low--only a few percent at most. You can search the Internet for Fannie Mae reserve requirements to find more specific information. FYI, they generally will include 60% of an IRA balance for purposes of the reserve calculation. Also, you cannot contribute more than your earnings to an IRA, so I'm not sure why you would want to borrow money to fund an IRA. This is especially true given the relatively low IRA contribution limits.
    1Reply
  • Earl Jornales
    OP
    Beaverton, OR · Member since 2016 · 11 posts · 2 votes
    10y

    It does have a low roof and if 60% is the general consideration, then putting all of the reserves into it doesn't sound like a good plan.  Some money surely.. so perhaps I'll look to make contributions just from my salary in this case.  I'll do some research and maybe talk with some Fannie Mae and Freddie Mac lenders.  Thank you for that input.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free