Don't Do This When Considering a Home Purchase
No Major Purchase of Any Kind
Remember not to make any major purchase that would create new debt of any kind. This includes furniture, appliances, electronic equipment, jewelry, or vacations on credit cards, expensive weddings, automobiles, boats, snow vehicles, RVs, etc.
Don’t Move Money Around
Lenders reviewing a buyer's loan application for approval on a new home will be concerned about the source of funds for down payment and closing costs. Most likely, will have to provide statements from the last two or three months on any liquid assets. This includes checking accounts, savings accounts, gifted money, money market funds, certificates of deposit, stock statements, mutual funds, and even company 401K and retirement accounts.
If money has been moved between accounts during that time, there may be large deposits and withdrawals in some of them.
The mortgage underwriter (the person who actually approves the loan) will probably require a complete paper trail of all the withdrawals and deposits. The buyer may be required to produce cancelled checks, deposit receipts, and other data, which could get quite tedious.
The buyer needs to understand that lenders, underwiriters and others must abide by federal guidelines in order to do their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving money around, even if the buyer is consolidating funds to make it "easier," could make it more difficult for the lender to properly document. And if a buyer is closing accounts at one bank and opening new accounts at another, there will once again have to be a paper trail and documentation will be required.
Buyers should leave their money where it is until they discuss the best way to make the most of it with a professional qualified lender.
|