It seems like recently I have been running into the same issue with many of my clients. Where is their cash to close coming from to purchase a new home? I have a couple in particular that just got married and, of course, received a stack of cash and checks as gifts from their guests.
On their January bank statement a $10,000 lump sum deposit appeared and in turn questions arose. Luckily for them we are now in April.
Loan requirements are your most recent 1-2 months bank statements. If we had needed to use January’s bank statement my clients would have been in a bit of a predicament. Can you imagine being required to hunt down gift letters from every single guest at your wedding?
Another instance was a young man was selling his ATV for cash to close. I’m glad he informed me of this so we could take the proper steps to document the funds.
When you have an asset that there is a title or a document showing your ownership prior to selling or transferring ownership, please take the time to make a copy! We need a copy of the bill of sale and to fully cover your bases have the buyer pay in a cashiers check. Any cash transaction is not documentable.
If any of the bank statements show deposits that are not payroll deposits & are over 25% of you monthly gross income, the source of those deposits should be documented (For example: gifts, inheritance, liquidation of stocks, etc.). All mortgage program guidelines require a full paper trail on where these deposits originated, copies of checks, deposit slips, etc. If any of the bank statements have more than one page, a copy of all pages are required, even if the other pages don’t show anything important or are blank. Depending on how long the transaction takes you may need to send in updated statements as you get them.
Copies of the most recent statements (or most recent quarterly statement) on any other asset accounts (like stocks, CD’s, 401k, IRA, etc.) are required. If these assets are going to be liquidated or borrowed against evidence of that is needed, and evidence of the deposit of the funds into the new account (such as deposit slips and copies of the check).
You are entering into a major financial transaction when purchasing a home! The best thing for you to do is to be upfront and honest with your loan officer from the very beginning because anything that is not disclosed upfront tends to cause problems near the end of the transaction process. Your loan officer is your advocate and will fight for you to get the loan you need to buy your home. Be honest with them and let them work for you! For questions or comments, please contact me at Ingrid.firstname.lastname@example.org or visit my websites at www.scottsdalemortgageexpert.com or www.cobaltmortgage.com/ingridquinn.