Reality is getting a home loan to buy a house is much, much different than it was 5 years ago which really was not that long ago. Getting a home loan in today’s world really requires you to prove every thing. Not only do you really have to show that you have a job and that you do make money, and that you can afford the payment, but that the funds you have for the down payment or the closing costs is really your money.
I know that may sound odd, but you really do have to prove that the money you are using to buy a house is really your money. With the Patriot Act and the war on terrorism and money laundering, when you are getting a home loan you have to show a paper trail basically of those funds or they must have been seasoned in your bank account in your name for at least 2 months.
So if you want the process to go smoothly in just this one part of the loan process put your money in the bank. I still find people that have money stashed here and there and when it comes to getting a home loan they have nothing in the bank account. Another tip to make the loan process a bit smoothly. Regardless of where you are getting an income, whether it be from your job or some kind of support if you do not have direct deposit and like to get the check and make your own deposits. Deposit the whole check, do not go to the bank and make a partial deposit. Just deposit the entire check and then once you have done that if you need funds then take what ever you have. Because when you have a pay stub showing you got paid $2k but all that was deposited in the bank was $1,300.00 and the next deposit was $800.00 or what ever then you have to explain why there is an inconsistency.
Also last tip to make the loan process a bit easier avoid taking out or making unscheduled deposits every time you make $500.00 deposit or withdrawal from your account the lender is going to ask for an explanation. They are looking for items you may have not disclosed other debts etc. You will have to write up a letter of explanation regarding those transactions.
Now if the lender does not believe your explanations as to why there are inconsistencies or whether those are your funds. They will disallow the use of those funds. So you may have $10k in the bank but it won’t matter, you have to get what is called gift funds (more on that in next post ) just to close your home loan because they will not consider the $10k yours.
So put your money in the bank to have the 2 months seasoning. If you are gonna make deposits and withdrawals make sure you can document the paper trail. Finally when you get your pay check deposit the entire pay check so it matches with your deposit, then take the funds you need.
Good lucking on buying your home.