topic Question about Funds for down payment in Mortgage Loans

Question about Funds for down payment

Anonymous — Fri, 15 May 2015 19:31:10 GMT

I am going through the process of being approved for a mortgage thru FHA. I have been pre-approved and have made an offer on a house and it was accepted. I have a question about the source of some of the funds in my checking account and the 60 day period for accounting for where my funds came from. If it matters my current median score is 659. I have made an offer on a home and baring any obstacles is supposed to close by June 19th at the latest.

I sold some unneeded items musical items last month and deposited $900 cash in my checking account on April 17th. I am a musician and sold off some unused equipment for cash at a musicians swap meet and have no way to prove the source of these funds. I deposited the money into my checking account not thinking and used the funds to pay down 2 credit cards that had extremely high balances and the funds would not actually be used for my 3.5% down payment. I will have the full amount of my down payment derived from my pension before my closing and those funds I can document.

Am I worrying for nothing? The closer to the end of this journey I get the more my mind keeps tossing up what ifs.

Re: Question about Funds for down payment

mwv813 — Fri, 15 May 2015 20:05:54 GMT

I wish I could help you here, but am posting because I would like to know the answer as well. My closing is scheduled for the 22nd and the LO hasn't said anything about the funds in my account - but they did get printouts of my last 2 bank statements for all personal and business accounts. I assume there was enough there i didn't need to justify further, but who knows. They might throw up a red flag on me at the last minute...

Re: Question about Funds for down payment

Anonymous — Fri, 15 May 2015 20:08:13 GMT

That is my biggest fear...a last minute problem.

Re: Question about Funds for down payment

mynameainttracy — Fri, 15 May 2015 20:24:18 GMT

I don't know for sure, but we were only questioned about any deposits that were greater than 25% of our regular monthly income deposits.

Re: Question about Funds for down payment

Anonymous — Fri, 15 May 2015 20:27:01 GMT

My monthly income is $2700. The deposit was $900. I wish I had someone to gift me but my parents are gone and my brother is unemployed. If they ask I will tell them the truth but if they need documentation I am out of luck.

Re: Question about Funds for down payment

Anonymous — Fri, 15 May 2015 22:04:47 GMT

I would say just ask your lender. One of our approval conditions was, "explain any deposits over $1300" they didn't care about anything less than that. Your lender should know their exact policy.

Re: Question about Funds for down payment

wendlan — Sat, 16 May 2015 00:01:07 GMT

My lender said we had to have the funds in the bank for 2 months,so from the time we were preapproved. It is in my savings seperate from other money.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 00:04:59 GMT

Ask your lender. They will be able to tell you for sure.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 00:08:20 GMT

I mentioned it in an email to the loan officer and he never said anything about the $900. He also knew that I would NOT have the 3.5% FHA down payment until nearly the time of closing and he was okay with that BUT...he is NOT the underwriting person and they may have questions or issues with the $900.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 00:27:16 GMT

Gotcha. I've always wondered if you were to explain a deposit as cash you've been holding. For example, let's say you apply for a mortgage and have cash on hand you've been saving. If that was explained to underwriting, that'd be similar to your situation.

Re: Question about Funds for down payment

StartingOver10 — Sat, 16 May 2015 14:55:50 GMT

@Anonymous wrote:
Gotcha. I've always wondered if you were to explain a deposit as cash you've been holding. For example, let's say you apply for a mortgage and have cash on hand you've been saving. If that was explained to underwriting, that'd be similar to your situation.

^^I can tell you 'cash on hand' is not an acceptable answer for the u/w. In the business we refer to it as 'mattress money' and it is not considered a reliable source of funds.

If your down payment and closing costs are covered with the other funds you have coming from sources that you can document, then you have no issue as the $900 will be excluded. If you can't document your down payment and closing costs funding, then that will be an issue.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 15:28:22 GMT

I do not normally have extra cash laying around or coming in, that was a one time deal. I do have enough money coming in to more than cover the 3.5% FHA required down payment. I guess it depends upon the lender as to whether extra undocumented funds are an issue. All, I can say is I have mentioned it to the loan officer and he said nothing. I have and will be honest about the source of that extra money if asked about it.

As time gets nearer to my closing I am probably being paranoid. I just want my loan to close with no last minute issues.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 15:31:58 GMT

I would say if anything then the $900 may not be able to be accounted for in down payment consideration... That being said, after closing you could apply that to your principal on the loan if you wanted.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 15:42:58 GMT

I already spent the $900. I used the money to pay down credit cards that were almost maxed out. I can document that I paid them down right after I deposited the $900. If the $900 were not in the past 60 days I wouldn't see an issue. I deposited the money on April 17th and paid the cards down the same day.

Re: Question about Funds for down payment

Anonymous — Sat, 16 May 2015 15:44:40 GMT

I would say that was a better option and you should be good to go. Good luck!

Re: Question about Funds for down payment

Anonymous — Mon, 18 May 2015 22:39:04 GMT

Talked to my loan guy today and revisited the $900 issue and now I am totally sc_ewd. My loan guy said that I have to be past the 60 days point on the $900 as per their underwriting department. I could very well lose the deal on this house and the money spent on the home inspection and termite inspection. I understand the reason for these new rules but they really can bite you in the backside if you are not fully aware of ALL of the regulations. My realtor said she would ask to extend the time for closing from the seller but they are under no obligation to do so. I should know to morrow for sure if I am dead in the water.

Re: Question about Funds for down payment

Anonymous — Tue, 19 May 2015 21:49:35 GMT

Good news! The seller agreed to move the closing to June 26th and the loan officer said that he can make things work, so barring any more screw ups from me or someone torpedoing the deal, things are moving forward. This will get the $900 out of the 60 day window.

Re: Question about Funds for down payment

Anonymous — Tue, 19 May 2015 21:59:08 GMT

Whew!! Great news!!

Re: Question about Funds for down payment

StartingOver10 — Wed, 20 May 2015 00:38:29 GMT

@Anonymous wrote:
Good news! The seller agreed to move the closing to June 26th and the loan officer said that he can make things work, so barring any more screw ups from me or someone torpedoing the deal, things are moving forward. This will get the $900 out of the 60 day window.

Wonderful solution! Congrats on working it out

Re: Question about Funds for down payment

Anonymous — Wed, 20 May 2015 00:47:14 GMT

I wish I could take credit for the solution but my Realtor deserves that credit. She is a genius at solving problems. My stress level has been about an 8 out of 10 during this process. I am usually pretty good at solving problems but I had nothing for this disaster of my own making. My loan guy is good also but he does have to follow the ever changing rules. If it is Gods will this will all work out.