One of the most common mortgage issues is verifying cash for your down payment. If it's a gift, there are several steps we need to take. If you have money in the bank that you are using, that just needs to be verified. If you are getting money from a 4o1K, we just need to show the transaction history.
For gift money, there are differences depending on the type of loan you are getting. If you are using FHA financing, you will need to document more on the gift trail. We will need a gift letter signed by both you and the gift donor. We also need a copy of the check (preferably a cashier's check) and a bank statement from the donor (family member) showing that they had the ability to give you a gift. We need to show the deposit into your account and the new balance. If you are using conventional financing, we still need a copy of the check, but typically we do not need a copy of the donor's bank statement. We will need to show the deposit into your account with the new balance.
Make sure you make a copy of the gift check and give that to your lender. You can have more than one gift, but you will need the same documentation on each gift.
Look over your bank statement, if there are large deposits on the bank statement, you will need to document them. You will need a copy of the check and to show where it came from. Payroll is usually direct deposited and we can see that deposit. If you sell something, like a car, you need to document the sale, show proof of ownership, show a copy of the deposit and have some type of receipt of the sale. You will also need to document the value of the item you are selling.
Try to eliminate transfers back and forth between savings and checking accounts. We need to show the transactions and follow all deposits, so the less movement of money, the easier it is to document. If your spouse is not on the new loan, you will want to make sure any money you need is in your account, not her account – if it's in an account with just her name on it, she has to gift it to you and it isn't considered your funds into the transaction.
If you have questions on the money you need for closing, make sure you ask your lender. All the money used in the transaction has to be documented. This is one area where we see a lot of questions and issues that come up right before closing. The more documentation, the better! This is one area where it's much easier to document everything correctly the first time rather than try and solve issues right before closing!! If you aren't sure about something, please ask your lender to make sure you won't have a problem with underwriting!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants – Email – Website
