A local lender Glenn Benson with Atlantic Financial sent me this great article – it is very very relevant and useful. Many Arlington real estate buyers postpone down payment funding till they have a ratified contract on their new Arlington home – that could lead to a real paperwork nightmare and here is why.
Let’s say your family stashed some cash that they want to give you for down-payment, or you are planning on selling something to get cash, or your grandma wants to gift you her life savings. If that money gets to your account within 2 months of you buying a house – the lender will question and need verification for every deposit that’s “out of the ordinary”. There is no way to verify cash and it will be difficult to get a statement from your grandma. So save yourself a headache and get all the money you need ahead of time and banks won’t ask a single question.
Here is the article:
“The underwriting guidelines are growing more and more complex by the day. I see the same onerous paperwork requests and documentation issues over and over again.
The good news is that there is one easy remedy to make buying a home VERY EASY!
*** In the months leading up to your purchase, keep an eye on the number of incoming bank transfers and non-payroll deposits in your bank accounts. Minimizing this will reduce added documentation requirements later on and make for a stress-free transaction***
Seems easy enough, right? Well, it can be with the proper foresight. And it will make your transaction MUCH SMOOTHER AND MUCH QUICKER.
Underwriters are looking for 2 things when it comes to bank statements:
- Do you have enough liquid funds for the downpayment and for cash reserves
- Where do these funds comes from
You will be asked to provide the most recent 2 months bank statements (all pages).
If it has a large deposit (over $1000 and NOT from payroll), you will be asked to provide documentation showing where it came from.
This could lead you to provide either a copy of the check or another bank statement. This is where frustration can set in.
However – if the first bank statement is clean of any large deposits (over $1000)… you are good to go!
A smooth process awaits you. If you know you have transfers or non-payroll deposits coming in, set aside an account to use for these items. The larger account(s) with sufficient funds can be left untouched so that when the underwriter asks for 1 or 2 months worth of bank statement – No large deposits!
Keep in mind, funds leaving your account are not scrutinized. Only funds coming in.”