How much money do you need to buy a home? How will the bank verify that you have it?
To understand and answer these questions, let's take some advice from our 40th president, Ronald Reagan: “Trust but verify.”
Will a bank simply trust that you have a certain amount of money?
No! They must verify that all your accounts check out accordingly.
Why? Here's the complex answer: Agency underwriting guidelines for asset verification are imperative to ensure the assets being used in a real estate transaction are derived from an acceptable source.
To simplify, total transparency is key.
Simply provide two consecutive months of all your bank statements. They can be downloaded or obtained at your local bank branch. Avoid screenshots, altering statements or omitting pages. Large or irrregular deposits are scrutinized to verify that they're from an acceptable source. Transfers, gifts from relatives, automobile sale proceeds and retirement account loans, for example, all require specific documentation. Avoid cash deposits. Cash is not king in a mortgage transaction.
Also, try to have as few open bank accounts as possible. More bank accounts, more paper. More paper, more transactions. More transactions, more questions. More questions, more frustrated borrowers. For those of you that require a secret account to purchase items that your significant other deems ridiculous, it's time to grow up. Keep copies of all deposit checks. Copies of these checks along with bank statements proving these checks have cleared will be needed.
Don't panic if this all seems complicated. Proper planning and communication with your mortgage professional will ensure that everything goes smoothly.
We would love to be your mortgage professionals. Call Homeland today at 201-808-8181 to get started!