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Dan the loanman

Making sure your Cash-To-Close Comes From The Proper Source

Friday, December 10, 2010 - Article by: Dan the loanman - ArcStone Financial Services - Message

Providing proper asset documentation and the actual source of the funds is a critical element of the loan closing process.There's nothing worse in a real estate purchase than making it all the way through the hoops and hurdles just to have a loan denied after the final documents have been signed due to the borrower using the wrong checking account for the down payment.Seasoning of the down payment money is just as important as the source, which is why underwriters typically require at least two months bank / asset statements in the initial mortgage approval process.A Few Acceptable Sources Of Down Payment Include:Bank Accounts - checking / savings Investment Accounts - money market, mutual funds Retirement Funds - keep in mind that borrowing against a 401K plan will require a repayment, which will be calculated in the Debt-to-Income Ratio Life Insurance - Cash value and face amount Gifts - Family members can gift down payment funds with certain restrictions Inheritance / Trust Funds Government Grants - Many state, county and city agencies offer special down payment assistance programs It is extremely important to make sure your loan officer is aware of the exact source of your down payment as early in the process as possible so that all necessary questions, documentation and explanations can be reviewed / approved by an underwriter.A good rule-of-thumb to remember is that whatever funds you're using as a down payment have to be pre-approved by an underwriter at the beginning of the mortgage approval process.Basically, if you accidentally forget to deposit money in your checking account on the way to the closing appointment, it is not acceptable to get a cashier's check from a friend's account until you have a chance to pay them back later.

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