This just in from one of our local lenders:
Did You Know that we may have to ask for additional documentation from your buyers?
It has always been a requirement for us to provide two month’s bank statements to document assets and reserves, but our job doesn’t end there. The underwriter reviews the bank statements thoroughly and if there are any unusual or large deposits, we are required to get a copy of the deposit in addition to providing an explanation. Why would we have to do this? Lenders have to be sure the buyer is not receiving money from the seller, real estate agents, or even from a loan that hasn’t been disclosed.
It is never a bad idea to ask your client where the down payment is coming from so that you can better estimate the loan conditions deadline. Also, the more information that we have upfront, the faster the process will go.
As always, please call us with any questions.
Kathryn Pedersen and Holly Rogers
Mortgage Lenders
Yampa Valley Bank
Genuine Hometown Banking
Direct Line – 970.875.1609
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How does where the downpayment money is coming from affect the loan conditions deadline? The loan conditions deadline is one of the deadline dates in the contract. The buyer, along with the buyer’s agent, chooses this deadline date and it’s the date by which the buyer is pretty sure their loan will have gone through the entire underwriting process.
If someone has their downpayment money already sitting in an easily accessible account, that’s one thing. But if they have to withdraw the downpayment funds from their 401K that alone can take up to three weeks. If the downpayment money is coming as a gift from the buyer’s parents, the buyer’s parents’ bank statements will be scrutinized just as closely as the buyers’, to see where their money came from. And if the money is coming from another bank, it may take awhile for the check to clear from the originiating bank.
Lenders like to have 45 days to process the loan and so they like to see Loan conditions Deadline to be 45 days out from getting under contract, but in some instances they are able to get it down within 30 days if there aren’t these sorts of hold ups.
A client of mine that closed on his Steamboat town house a couple of weeks ago (he used a different lender) and he was not happy with the amount of documention he had to provide. His wife travels a lot for her work and is constantly being reimbursed for her travel expenses. All of those deposits apparently needed to be backed up with all her Expense Reports, he said sometimes for amounts as little as $58.00.