How To Properly Document The Monies To Buy A Home

Are you buying a home? This common mortgage mistake can end up
creating more unnecessary challenges for you during the underwriting
process. Here are the things you should look out for…

When you are buying a home, you need to show your lender that you
have a down payment and access to funds to close. This money needs to
come from sources that can be documented. This money needs to be fully
documented before the transaction and when moving it from your bank
account to your escrow account.

Lenders are going to require at least 60 days of asset documentation from each
source that your money comes from. This is required because your lender
will need to verify that the money promised does exist and is eligible
for use.

Let us say that you have put your money into escrow and, as
requested, you are doing the best you can to document the movement of
money from the account going to escrow. This entails providing a bank
statement specifically showing the money leaving your account and the
money being accepted by escrow through an EMD (earnest money deposit).

If you cannot get a bank statement, if it is the middle of the month
and new statements are not out yet, the next best thing is to get a bank
printout confirming the transaction and confirming the amount of money
remaining in the account. The bank printout must show the date of the
transaction and the current time stamp of the printout, confirming that
the money has been moved prior to the printout date. If the bank
printout does not have this information, it will automatically halt the
closing process of your loan and delay your loan contingency removal or
extend your close of escrow date.

This method can be used for both your down payment and funds for cash
to close. This is to provide authenticity for your account and to show
clearly on paper that the account is yours and the money is yours to
use. Banks and lenders require this information to be clear cut and “in
your face”. Never assume that “common sense” will be enough.

Providing any of the following in lieu of the bank printout will not work:

– A bank statement with someone else’s name on it

– Bank statement in trust

– Pictures of bank statements taken from a smart phone or snapshot application

– Bank printout with no time stamp and date

In addition, the bank printout and time stamp must show the remaining
balance that is left in your account. For example, if you had $130,000
in assets and your down payment from this account was $50,000, your
account statement should now show $80,000 remaining.

If you are looking to purchase a home, talk to a seasoned loan
professional who can walk you through properly documenting the money
required to buy your home.