IRA Non-Recourse Loan Process & Closing
North American Savings Bank follows an easy, two-stage process for approving your IRA-Non Recourse Loan.
STAGE 1 – Self Directed IRA Real Estate Loan:
Complete the loan application, and be sure to, include your spouse's name and, marital status. Provide the most recent IRA statements for all of your IRA accounts. You must have sufficient IRA funds available through all of your IRA accounts to fund the purchase, closing costs and reserve requirements. The funds for reserves must be in the name of the same account holder who is purchasing the real estate. The reserve requirement may not be fulfilled by using IRA funds from an individual who is not the account holder. If funds from another IRA are being used, the structure of the purchase (title) must reflect both IRAs as owners with defined percentages of ownership.
Review NASB's ineligible property list. Not all real estate can receive financing under this program. If the property is a condo, the NASB condo questionnaire must be completed by a Condo Association Representative. NASB will then be able to determine if the condo meets our criteria for eligible property. See List of Ineligible Properties.
Review the documents and procedures that your IRA custodian requires you to complete prior to signing a real estate purchase contract. Complete and sign all documents that are on your IRA checklist. This transaction involves third parties that must coordinate closing times and procedures, such as title work, appraisers, insurance agents etc.
Be aware that closing dates and time periods are essential and will take roughly 45 days to close from the date the loan application and appraisal fee is received by NASB. Upon negotiating your real estate contract, the IRA, LLC or Trust Company must sign the real estate contract. Your IRA or LLC will typically be the owner of the Real Estate. Therefore, the Deed and title work should be titled in the name of the IRA, FBO Account holder___(name)___. If you intend to purchase the real estate in the name of an LLC with your IRA owning an interest in the LLC, we must have copies of the following documents for the LLC.
- Articles of Organization (certified by Secretary of State).
- Operating Agreement.
- Certificate of Good standing (from the Secretary of State).
- Member Resolutions authorizing the purchase and financing of the real estate.
All transfer of funds (earnest money and appraisal fee) must come directly from the Custodian of the IRA. You will need to coordinate the transfer of funds with your IRA. We will not order an appraisal until we have the appraisal fee. There are two options for paying the appraisal fee. You can have the Custodian of your IRA wire or send a check to NASB for the appraisal from your IRA funds; or you may send non-IRA funds for an appraisal deposit, to cover the cost of the appraisal. The cost of the appraisal will be paid at closing using your IRA funds and the appraisal deposit will be refunded to you upon closing.
Contact your homeowner's insurance agent to inform the agent of the type of transaction this is and how the title will be held within your IRA. Your IRA must be listed as an insured. The policy term must be for one year or longer (No short term binders will be accepted). NASB must have a copy of the insurance policy and invoice 2 weeks prior to closing.
STAGE 2 - Self Directed IRA Real Estate Loan:
NASB will review the completed loan application, verify your IRA asset information with the documents you provide, order the real estate appraisal, review title work and review any documents related to an LLC.
Upon receipt, NASB will review the completed real estate appraisal and other loan documentation. If approved, you will be so notified so you can schedule a time with your title company to execute your documents as "read and approved" prior to the Loan Closing.
NASB will obtain a schedule of fees from your title company and confirm the closing date with the seller.
- NASB's regular closing fees are as follows:
- Origination Fee 1% (based on loan amount)
- Appraisal Fee $510-$600
- Underwriting Fee $385
- Processing Fee $310
- Flood Certification $16
- Settlement Fee ______ (charged by title company/attorney)
- Title Insurance ______
- Recording Fees ______
- Mortgage Register. Tax ______
- Prepaid Interest/taxes ______
- Initial Hazard Ins. Prem. ______
- ½% increase for cash out refinances (if application is taken 6 months from original purchase)
- Escrows for taxes and insurance are required
NASB will notify the title company that the closing documents are to be signed as "read and approved" by the Account Holder, and forward to IRA Custodian for signatures.
After the IRA Custodian (or LLC) has executed the closing documents, the Custodian will wire the funds for closing (down payment and closing costs) to the Title Company for disbursement of sale proceeds to the seller.
NASB IRA LOAN TIMELINE
0-10 Days* Items needed
- Driver’s license
- IRA statements
- Appraisal fee
- Instruction Letter to Purchase Real Estate
- Order Property Insurance
- Disclosures mailed out
10-30 Days* Items needed
- Contract titled correctly
- Contract executed by custodian
- Satisfactory appraisal
- Title commitment from Title Co/Attorney
30-45 Days* Closing process = 7-10 days
- Loans docs sent to Title Co/Attorney
- Title Co/Attorney mail docs to IRA account holder to read & approve
- Borrower mails docs to Custodian/Administrator to execute
- Docs mailed back to Title Co/Attorney. Loan is funded.
North American Savings Bank, F.S.B • Member FDIC • Equal Housing Lender
Square footage must be 750+ (per unit) for Condos and 900+ (per unit) for all other properties.