Hello my question is will a Civil Service retirement loan be counted in my income to debt retio...it will not be on my credit report and when I retire I will no longer be required to make the monthly payments because a lump sum will be taken from my total disbursements. I took the loan out a year ago,$35,000 and currently have $53,000 in the account ....any responses will be appreciated.
@Robert Cummins I am not familiar with loans from a Civil Service retirement, but I am very familiar with 401K loans and qualifying, so they may be similar. With a 401K loan and a typical FHA, CONV loan, the underwriter will count against you the actual payment. The 401K loan willl also not show on the credit report, but it will show on the paystub or when they order a Verification of Employment (VOE) from your employer. Talk to your loan officer / lender, and they can calculate debt ratios to see if the payment will impact your qualifying.
thank you for your response, I was told that 401 K loans do not count, now I'm really confused.
The short answer is no.Loans Secured by Financial Assets
When a borrower uses his or her financial assets—life insurance policies, 401(k) accounts, individual retirement accounts, certificates of deposit, stocks, bonds, etc.—as security for a loan, the borrower has a contingent liability.
The lender is not required to include this contingent liability as part of the borrower’s recurring monthly debt obligations provided the lender obtains a copy of the applicable loan instrument that shows the borrower’s financial asset as collateral for the loan. If the borrower intends to use the same asset to satisfy financial reserve requirements, the lender must reduce the value of the asset (the account balance, in most cases) by the proceeds from the secured loan and any related fees to determine whether the borrower has sufficient reserves.
Im not sure about Civil Service retirement loans but I was told 401k loans do not count against me.
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