NOTE: This post is not about: * How to win the bidding war (to me, it's random guessing game) * Predicting the housing market (PS: I try to be mentally prepared for a crash...) * Choosing the best lender / Shopping rate I got a lot of help from the Blind community for my career and house hunting, so thought I'd give back by sharing my experience (i.e., dumb mistakes I made) as a first-time home buyer... regarding the loan process. For the basics, it's a norm to close your loan within 30 calendar days, so saving every business day counts. I found that there are lots of potential hiccups that could add up to a lot of stress... A) Asset transfer timeline, limits, and fees Background: * Transferring cash, stocks, 401k usually results in a mortgage rate discount. * Wire transfer for ~3% deposit within 1 day on offer acceptance * Wire transfer for closing the mortgage application (remaining of down payment + misc fees). 1a. Cash: I always think I can transfer whenever I feel like and it will be easy... until I found that there is a withdrawal limit (ACH transfer, which is free) on a rolling window of X days in one of my savings accounts with a lot of prepared fund. I had no choice but had to use a wire transfer (which incurs fee on both withdrawal and deposit end = totaling $40). Do research this when preparing your fund. 1b. More generally, check wire transfer limits, too. 2. Wire: I thought I could wire transfer 3% easily from my savings account same day on offer accept. It turns out wire transfer could take >1 day in my case.... luckily my other multiple accounts had *just* enough fund for the deposit. 3. Stocks: I always know ACAT takes around 5-7 business days, but I forgot to research the exact process to ensure that cost basis info (important for tax purposes!) would be properly transferred over -- It turns out for Google RSUs (at least I was told this way) you have to first transfer from your stock plan account to another individual brokerage account (this takes ~2 days), then initiate ACAT from the bank you do mortgage with (this takes maybe 5-7 days). 4. 401k: This is the more painful part. For some brokerage firms, you have to wait for a check to be mailed to you (5 days, or with a fee 2 days), and the you mail the check to your bank. 5. Opening IRA (or Roth) and brokerage account: If I were to do this all over again, I would have opened both IRA and brokerage accounts in *each* firm I would *potentially* apply mortgage with. Instead, what I did was: shop for mortgage rate -> decide which bank -> open accounts -> wait a few days until they are finally open -> start transfer. The account numbers are essential info to initiate stock (ACAT/DTC) transfer or 401k contribution (into IRA), and there can be hiccups along the way (in my case, I was notified about notary *5 days after* I opened my accounts!). You should minimize chances for any delays. 6. Set aside time for calling your brokerage/banks... multiple times for each transfer. I called a lot to double check my understanding of transfer process, whether my transfers were in progress, and when they finally went through. Often time, I would be put on hold for ~20 minutes, or be transferred to multiple people so each call can be very long... I was lucky it's before RTO when I was involved in this tiring asset transfer process, so I had better flexibility when to call or receive a call. Will stop here for now, but I can write more if any of you find any of the above mildly useful :) TC: Maybe 400k+ if stock won't crash
Ok but seriously this post just saved my a$$, weโre closing in 10 days and I hadnโt checked my wire transfer limits from E*trade, thank you sir I have enough time to salvage this
Thanks OP! Can you transfer 401k to Roth, while maintaining employment with your current employer?
You can xfer 401k from previous employer to an IRA. Roth is a type of 401k or ira
So there is pre-tax VS post-tax 401k What I did was transfer pre-tax 401k -> Traditional IRA If you do pre-tax 401k (typical cases) -> Roth IRA, it's a taxable event I believe
Fidelity does free wire transfers
wow TIL thanks
Also, if you are planning buying, consolidate your account 2-3 months prior. This makes thing so much easier. I have to dealt with the underwriter to explain each account, where money came from etc...
Do this more than 3 months before. Otherwise you will have to explain it all in double
If you consolidate too early, youโll lose the capability of transferring for lower mortgage rate.
I personally hate all these random limits. Had many of same experiences.
I know, right?
How do you get a mortgage rate discount for transferring funds?
Mortgage firms call this โnew โ relationship discount. Typically, itโs new money or equivalent that wonโt be used towards the mortgage downpayment or closing costs you have with them.
Often advertised for private banking customers at banks. Chase Private Client has rate discounts for existing balances and new money: https://www.chase.com/personal/mortgage/relationshipoffers#ratediscounts
I'm a first time buyer in middle of closing too. I realized that there's a right way of closing and an "almost right" way of closing, with latter being significantly worse experience. Few more points 1. Keep your and spouse job and rental history stable for 2 years before application date. 2. Shop for rates and find the relationship discount offers before starting the bidding, not after bid accept. 3. Do all rate shopping within 1 week and few weeks before starting bids, so credit report shows 1 mortgage inquiry instead of n. In 1st week of 30 days closing, you'll be under lot of pressure, making shopping difficult. 4. Don't increase credit limit or apply for new credit cards within last 1 year of application date. 5. Ask each lender for "loan estimate" document to get the actual rates and closing costs. Some may try to avoid giving it, but they are legally obliged to give this disclosure before you sign up with them. Many banks will match the rates if you give them a competing and better loan estimate from another bank. 6. Spend few hour reading about meaning of title transfer, title insurance, homeowners insurance, escrow, refinance, ARM, appraisal gap, loan recasting etc. 7. Collect your 3% earnest money + 20% down + buffer for appraisal gap in a single checking account before any bids. Financial transfers are surprisingly slow and can take 7 days to complete. 8. Learn how to read the house disclosure and appraisal reports yourself instead of blindly relying on realtor.
Useful Post OP, Thanks! How good was the relationship discount ? Curious username too - reminds me of โStonks only ๐โ but you are mentally prepared for a housing crash ๐
0.125% discount per 250k transfer, up to 1M Like I said my username is just my hope after I decided to buy a home in this crazy market
Multiple things can be done better. Wire transfer fees can be easily waived at big banks if you already have a higher tier checking account. Usually employee direct deposit gets you higher tier or a balance above $50-100k. Never do an ACAT transfer as that typically involves a fee. Do a DTC transfer. Etrade has a direct online form just for employee stock where it is a simple process to transfer out. Moving 401k especially traditional to an IRA account significantly limits your ability to do a Backdoor Roth conversion due to the pro rata rule. Check if your employer allows converting the ira back to 401k before doing this. Your employee stock cost basis may not get transferred properly and it may be better to avoid selling any shares in Wells Fargo until you have the cost basis established or best case move the funds back before initiating any trade
Thanks for the tips! > Moving 401k especially traditional to an IRA account significantly limits your ability to do a Backdoor Roth conversion due to the pro rata rule. Care to explain more? What I did was * Ex-employer 401k (pretax) -> Traditional IRA * Current employer: Contribute to pretax 401k * Current employer: Contribute to post-tax 401k -> Backdoor Roth conversion Am I subject to this pro rata rule? I wonder if I made a big mistake here :/ > employee stock cost basis may not get transferred properly Mind elaborating more? What I did is: Move RSUs from stock plan account -> Individual in same account -> Wait until cost basis info is transferred -> Move to bank I do mortgage with for relationship Did I miss anything?
https://advancedretirementstrategies.com/what-the-pro-rata-rule-means-for-your-backdoor-roth-ira/ Pro rata mainly impacts the IRA contributions outside of your employer For cost basis see if you are able to get the cost basis of all the lots in your Wells Fargo account. If you donโt plan on keeping funds in wells beyond closing then it is better to avoid selling and just move the shares back
Username checks out. And so many words with out TC?
honestly i try to be mentally prepared for a crash, and my username just indicates my hope lol
uhh does TC matter under this context?