Great post about the need for lenders to verify any deposits to your account. Before making any deposits to you account you need to make sure you have the audit trail in case it is needed.
Dang! It just happened again! My buyer's daughter transferred $20K into their account, because they're really buying the condo for the daughter with her money. (The daughter has bad credit, but a wad of money, so Mom and Dad are making the purchase for her).
Now we need to show proof of where the money came from - which means copies of the original check, copies of the cashed check, copies of her birth certificate, marriage license, and dog's vaccination. OK... I jest about the last 3, but DON'T MAKE DEPOSITS WITHOUT SPEAKING TO YOUR LENDER ABOUT THE CONSEQUENCES TO YOUR LOAN. Federal guidelines mandate we need a paper trail for every cent of money that goes through your bank account.
Getting these verifications take time... time that can throw a serious wrench into your loan process. So while it may not be a problem getting down payment assistance from elsewhere, the timing of it causes the real problem.
So what do you do, if someone else is giving you money for your down payment?
1. Be sure your lender approves the amount.
2. Provide a gift letter, promising to put up the money as a gift.
3. Get a cashiers check written directly to the title company.
4. Wait until you have loan approval, and have signed your loan documents.
5. THEN deposit your cashier's check directly into the title company. (check with your local customs, as not all states handle title and escrow the way we do here in Fair Oaks). having the gift money going directly into the title company means only one paper trail... from the gifter to the title coompany. But if it first goes to the person buying the house, there is an extra layer of paper trail involved, which takes more time.
You do this, and you will avoid a bundle of paperwork that can drive you crazy. Just make sure you have run this by your lender... then do as they say!
OR... go buy a lottery ticket tonight, then pay cash!
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Sally Dunbar, 30 year Broker Associate, Lyon Real Estate, Fair Oaks, (916) 535-0356, SDunbar@GoLyon.com