Wednesday, April 3, 2013 - Article by: Eric Blossman - Pacific Union Financial -
If there is one critical area that we see time and time after again for new homebuyers it is the sourcing of the funds to close. New homebuyers need to be informed that the last 2 months bank statement will be reviewed at length and that all deposits will need to be able to be sourced. What this means is that all the funds going into that bank account must be verified. An underwriter is wanting to ensure that all the funds for closing belong to the buyer and that there are no other interested parties in the transaction that are contributing.
The biggest problem we see time and time again is cash deposits. If you are shopping for a home, and are within 60 days of entering under contract do not deposit cash into your account. Cash deposits cannot be verified, and underwriters are forced to subtract all cash deposits from your verified funds for closing. For example, let's say you need $10,000 for closing and there is a $5,000, well guess what?? You now only have $5,000 verified and the underwriter will be looking for another $5,000 before you can be cleared for closing.
Gift funds are always allowed so before accepting any cash gifts or selling your old clunker for cash, see if you can get a gift from a family member. If you go this route, there is a right way and wrong way to do it. You must souce these funds from the donor's account, into yours so under no circumstance should you accept any cash gifts for closing. It will make your smooth closing turn into a really bumpy ride.
Good luck to all of you!
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