Mortgage planning

 

 

 

 

 

 

 

 

 

One of the issues we see arise during the loan process happen while verifying down payment.  Down payment funds may come from several sources, and all of them have their own unique documentation requirements.  If the underwriter is unable to easily see where the money came from it can cause a huge headache for everybody, including you.

Luckily, there are things you can do to help ensure that this part of the process is as smooth as possible.  When reviewing the bank/investment account from which the Down Payment will be coming from, the underwriter is looking over the most current 60 days in the transaction history.  Any deposits into the account, besides payroll direct deposits, will need to be explained. This makes the easiest way to avoid frustration is to have your down payment funds already in a separate account with no deposits within the past 2 months.   If this isn’t the case, here are the three types of deposits and their documentation requirements, unless the deposit is Gift Funds which I’ll cover separately below, they are:

Transfer from another bank/investment account – When a transfer of funds is shown, we will also need to see the most recent 60 days’ transaction history of the originating account.  Keep in mind that all deposits made to this originating account will need to be explained too!

Check Deposits – When a non-payroll check is deposited, the documentation requirement depends on where the money originated.  Checks that are a result of withdrawing money from another account will require a 60 days’ transaction history.  Any personal checks will require a letter of explanation about the source, consult your Loan Officer for the best way to do this.

Cash Deposits – These are the hardest to verify and cause problems the most often.  Deposits that are unable to be properly accounted for can’t be counted towards your down payment.  Because of the complexity that sometimes surround these, it’s best to consult with you Loan Officer about these.

If you will be receiving a financial Gift, here are the documentation requirements:

  • Gift Letter signed by donor and borrower(s)
  • Verification of transfer of Gift Funds:
    • If the gift funds have already been transferred, you’ll need to provide the donor’s bank statement showing the withdrawal of the funds.
    • If the gift funds have not been transferred yet, you’ll need to provide the check or wire transfer and a bank statement showing the withdrawal from the donor’s account.

If you still have questions about this, please give us a call and we can go over this in more detail:

Call: (630) 481-7188

Email: pete.thompson@imortgage.com

 

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