The Consumer’s Mortgage Handbook: Managing Your Funds Prior to Closing
January 6th, 2012By Ron Blessey, Broker/Owner, Home Buyers Mortgage Co.
In anticipation of closing a purchase transaction, buyers need to be aware of lender requirements when it comes to documenting assets in bank, investment and retirement accounts. The following is a list of those requirements:
1. Upon a borrower application, I request the most recent two months statements for all their asset accounts. I must have all pages of each statement, even if the final page shows “this page left blank intentionally.” Online printouts are generally not acceptable. The lender wants to see an actual statement on the depository’s letterhead with all contact information for the person handling the account and it must contain all account numbers and balances.
2. The earnest money check, which is presented to the buyer’s agent with the offer, must eventually be verified as cleared. A copy of the cancelled check, front and back, is adequate once it clears. A subsequent statement showing clearly the check number, payee and the date the check cleared the account, is adequate as well.
3. Prior to closing, the funds that will be used for the down payment must be paper trailed. If stocks or bonds are sold, the borrower should allow a minimum of five days for the sale and transfer of those funds. A confirmation of the sale of funds from the depository, along with a deposit slip showing the amount of funds deposited into the account being used for closing, will be required.
4. It is not advisable for borrowers to move funds from account to account during the loan process because this will increase the amount of documentation the lender will require.
5. Any deposits over $500 will need to be documented. When the underwriter reviews the statements provided, they will ask for a paper trail for the deposits shown on the statement. If they can be traced to another statement and the trail from one account to the other is clearly shown on both statements, this will suffice. Any major increase of the balance from one statement to the next will require an explanation.