Many times we have questions from Mortgage Loan underwriters about deposits showing on a bank statement. Seems kinda silly at times… but they really do want to know where that extra $350 came from! If you are buying a house, and you are having a yard sale to try and raise a little extra cash – this can be difficult to document!
If there are any unusual or extraordinary deposits into your account the deposit will need to be documented. If they cannot be documented the funds will not be given credit in your transaction. This could lead to a denial, because an underwriter suspects a cash advance on a credit card or the funds that are otherwise borrowed.
We have had delays for many different deposits over the years that are perfectly legitimate, we just needed to prove it: money earned while keep a neighbor’s child on a one time basis, brother or sister paying off a loan made several years earlier, inheritance or gift funds, lottery winnings, sale of an asset like a fishing boat.
If there are large and unusual deposits into your account (over $250 in most cases) plan on having to document it. Photocopy everything before you put the funds in the bank. Also, if you are selling an asset, like a boat, keep any and all paperwork associated with the transfer of the sale.
Another situation that becomes difficult? When money is distributed into multiple accounts. Do not create your downpayment and closing cost “stash” or “fund” with monies from multiple bank accounts strewn across multiple banks. Pick one bank, and one bank account at that bank.
If you are going to receive a gift for your closing costs, we suggest the following way for us to verify you received it:
- Deposit the downpayment gift as a single deposit.
- End your transaction.
- Collect a receipt for your deposit.
Under no circumstances should you “co-mingle” the gift deposit. If the gift is for 10% down on the home, the deposit receipt should be for 10% of the home’s purchase price. It should also match the exact amount specified on your certified downpayment gift letter. If the deposit amount fails to match the gift amount specified in the gift letter; or the amount shown on the gifter’s teller receipt; or the amount shown on the photocopy of the gift check, the underwriter is going to ask a TON of questions – make it easier on yourself, by making everything match
This is also true for folks who are receiving child support or separate maintenance. We must document that you receive the payments on time each month. If you take $50 out as cash one month, and put part of it in savings the next month – it’s very difficult to document. Put the ENTIRE check into one account – then pull funds out and distribute them to savings.
All of this might seem like overkill, especially to first time home buyers in NC – but trust me, these things will help you get your loan underwritten quicker, with the fewest hassles!
If you are a first time home buyer looking for low cash out of pocket ways to buy a house – and for whatever reason, the folks you just talked to said you’ll never be able to get a mortgage the way you want to… call us. We know all of the programs, we do USDA Home Loans, NC Housing Financing, FHA, Veteran’s Home Loans – the whole gambit. We can help, and we’ll give you straight up answers. Steve and Eleanor Thorne, 919 649 5058, we have the best rates – and we know the mortgage business!
We just had a borrower write this note:
The $500 deposit ($400 + $100) was because we sold a couch and loveseat to young couple from Durham on Craigslist.
If this is your situation… you’ll also have to show us the listing (seriously) on Craigslist.