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Roger
Roger, Lawyer
Category: Real Estate Law
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Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by West
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how or can i buy a house with 401k when im in forclosure. husband

Resolved Question:

how or can i buy a house with 401k when im in forclosure. husband is retired and i will be in january.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Roger replied 1 year ago.
Hi - my name is XXXXX XXXXX X'X a Real Estate litigation attorney. Thanks for your question.

I'm sorry about your situation, but I do have a bit of good news - because you want to take out money in order to prevent foreclosure, you should be able to do so without incurring a penalty. In many cases, you will be able to qualify for a hardship distribution of your 401(k). This will allow you to take out the money without any penalties. Another way that you could do this is to use a 401(k) loan. This will allow you to borrow money from the 401(k) and then pay it back with a specified amount of interest over time.

You need to contact the lender and ask what amount you need to prevent the foreclosure/a payoff of the loan. Also, you would need to ask for a deadline to pay the money to prevent foreclosure.

Once you have that information, you can contact your 401k administrator and ask to apply for a hardship withdrawal application to recover the funds. This process usually takes 30-45 days, so you need to get the wheels turning as soon as you can.

Although this will obviously take some of your retirement money away from you for future use, it will allow you to keep your house and avoid foreclosure.

I hope I've answered your questions, but if you have others, please REPLY and I'll be glad to respond. Thanks.
Customer: replied 1 year ago.

i never said to save house in forclosure. i said we couldnt afford it. i need somewhere cheap to live. can and how do i buy one with 401k. i dont know legality. looking at manufactured home i can afford.

Expert:  Roger replied 1 year ago.
I certainly apologize. I thought you were wanting to save the current home with 401k money, and that you otherwise could not afford to do it.

The process above still applies if you want to purchase a new home. You would have to file a hardship application with your 401k provider to withdraw money to purchase housing in light of your home being foreclosed.

Sorry for the misunderstanding. I hope this clears it up. If you have any additional Questions, please reply and I'll be glad to respond.
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 26000
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by West
Roger and 5 other Real Estate Law Specialists are ready to help you
Expert:  Roger replied 1 year ago.
Even if your hardship application weren't approved, you should still be able to withdraw the money from the 401k, but there would be a penalty - usually 10%, and you'd have to pay taxes on the money. But, you should be able to access the money for this use.
Customer: replied 1 year ago.

i know i can get it. im worried about lean or fraud by my present morgager owners

Expert:  Roger replied 1 year ago.
It is possible for the lender to sue you for a deficiency judgment and if it did, the license could place a lien against you. However, this is rare in your stare. Here's a link you can read on this : http://minnesotashortsale.org/foreclosure-overview/deficiency-judgment/


I don't think you should be concerned about a fraud claim based on what you've posted here.
Customer: replied 1 year ago.

is there anyway to protect the home i buy its my kids inheridence,

Expert:  Roger replied 1 year ago.
You should be able to protect your homestead property under Minnesota law, which allows for a homestead exemption: http://www.nolo.com/legal-encyclopedia/minnesota-bankruptcy-homestead-exemption.html

Also, it is possible that you could purchase the home and then deed the property to your children and reserve a life estate for yourself. This would allow title to the property to be in their name, and you would have the right to occupy/live in the property for the remainder of your life.

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