Looking for Refinance of personal Home, must understand SOLO 401K

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Looking for Refinance of personal Home, must understand SOLO 401K

Mark Spritz
Investor · Los Angeles, CA · Member since 2017 · 65 posts · 21 votes

I am having a big problem. Since Dec I have been trying to refinance my personal home. I have now tried 3 mortgage companies and have gone through the whole process only to find out at closing that I cannot sign the paper work because none of the companies/underwriters understand or know what a Solo 401K is and therefore they keep adding one of my Solo 401K Trust plan properties as an asset/liability to me personally. The property is correctly deeded and listed as a property owned by my Solo 401K plan, even the clerks at the county agree. But because the underwriter doesn't understand that, they say that that property HAS to be in the mortgage loan paperwork. So I can't sign and refinance my home because of that and that is costing me money.

What can I do? Anyone know of a good mortgage company that does personal homes and understands what a Solo 401K plan is?

Thanks

Mark

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Kyle MccawBusiness Member
Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
6y

I doubt a traditional lender will work in your case. Private lender should have no problems. Several self direct ira companies have networking events to help lenders and borrower meet. Quest Trust Company, Inc is very active in my area.

McCaw Property Management4.4900 Reviews
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  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    6y

    I doubt a traditional lender will work in your case. Private lender should have no problems. Several self direct ira companies have networking events to help lenders and borrower meet. Quest Trust Company, Inc is very active in my area.

    McCaw Property Management4.4900 Reviews
    WebsiteView Page
    2Reply
  • Brian EastmanPro Member
    Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Kyle Mccaw

    Your response does not match the question.  @Mark Spritz is not seeking a loan for his Solo 401(k).  

    Mark,  I suggest you seek some assistance from your Solo 401(k) plan provider or an attorney to provide a letter of instruction.

    If your 401(K) at Fidelity owns Apple, that is not considered a personal  asset or liability.  Likewise, when your custom 401(k) owns real property.  In fact, it would be a violation of the law for your to pledge the plan-held asset in any way relative to your personal loan.  You just need some legal authority to beat the underwriters over the head with.

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  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    6y

    Yep. I saw "The property is correctly deeded and listed as a property owned by my Solo 401K plan" and mixed this up with the personal home that is to be refinanced.

    McCaw Property Management4.4900 Reviews
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  • Juan Deshon
    Specialist · Houston Tx · Member since 2020 · 34 posts · 16 votes
    6y

    Afternoon Mark, 
    I agree with @Brian Eastman. Having your 401k plan provider and or a knowledgeable attorney assist you with a 3 way call to the Mortgage company could help educate the loan officer you have already started the loan process with. 

    Another Mortgage provider that is well known for understanding self-directed IRAs and Solo 401ks investments is North American Savings Bank, www.nasb.com. Quest Trust Company has partnered their Self-Directed IRA education along with NASB's lending education for years.

    1Reply
  • Mark Spritz
    OP
    Investor · Los Angeles, CA · Member since 2017 · 65 posts · 21 votes
    6y

    It was the underwriter that kept insisting my Solo401K property show up in my personal Home refinance. There is no way to be able to talk to the underwriter like that. 

    This Mortgage is for my personal property home. Nothing to do with Solo 401K, and shouldn't be. But unfortunately, the underwriters keep wanting to put a property owned under my Solo 401K as my own personal liability/asset. That is illegal.

    Thanks for the replies. Looks like NASB is a good .5% higher than the other mortgages I was going to get. Too high a difference. But thanks for that suggestion.

    Mark

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  • Mark Spritz
    OP
    Investor · Los Angeles, CA · Member since 2017 · 65 posts · 21 votes
    6y
    I had reached out to my plan provider when it happened and they did not say I could use an attorney or them to provide a letter of instruction. They just said that the SOLO 401K Property cannot be listed as a personal liability/asset, which I had already known.

    Originally posted by @Brian Eastman:

    @Kyle Mccaw

     Mark,  I suggest you seek some assistance from your Solo 401(k) plan provider or an attorney to provide a letter of instruction.

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    6y

    @Mark Spritz

    First, why would having an additional asset disqualify you from obtaining a mortgage? Is it because there is a mortgage against the property owned by your 401K? I am curious how the underwriter even knows that the 401k belongs to you? Did you make the mistake of naming the 401k with your own name, something like Mark Spritz, 401K? Or perhaps you once owned the property personally, and deeded it to your 401k. If so, is there an existing mortgage in your name?. I think there must be more to the story than the information you provided. I have extensive real estate holding on my solo 401k, just refinanced my home mortgage in March, and my 401k never came up in discussion or documentation? Did you list the 401k assets on your personal financial statement that was submitted to the loan underwriter?

    Private Mortgage Financing Partners, LLC
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  • Mark Spritz
    OP
    Investor · Los Angeles, CA · Member since 2017 · 65 posts · 21 votes
    6y
    The underwriter said that they did a third party search and the property came up with my name, even though it isn't under my name. I even called the county clerk and he said it is under the Trust name which does not include my name. 

    It didn't disqualify me for the loan. If I signed the final paperwork it would have made it fraud/early withdrawal.

    "Or perhaps you once owned the property personally, and deeded it to your 401k."
    That is not allowed as well. You cannot sell a personal property to your Solo 401K.

    I did not give them any information about my SOLO 401K, it was from a third party search that something came back with invalid information and the underwriter would not listen to us explaining why it was wrong. There is nothing more to the story.

    Don, what bank did you refinance with, I should call them and try to refinance through them if they did not use your SOLO 401K.

    Thanks for the reply.

    Mark

    Originally posted by @Don Konipol:

    @Mark Spritz

    First, why would having an additional asset disqualify you from obtaining a mortgage? Is it because there is a mortgage against the property owned by your 401K? I am curious how the underwriter even knows that the 401k belongs to you? Did you make the mistake of naming the 401k with your own name, something like Mark Spritz, 401K? Or perhaps you once owned the property personally, and deeded it to your 401k. If so, is there an existing mortgage in your name?. I think there must be more to the story than the information you provided. I have extensive real estate holding on my solo 401k, just refinanced my home mortgage in March, and my 401k never came up in discussion or documentation? Did you list the 401k assets on your personal financial statement that was submitted to the loan underwriter?

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