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Deposit explanations- Getting approval with non-paycheck deposit

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Deposit explanations- Getting approval with non-paycheck deposit

Hey Folks!  As always- thanks ahead of time for all the help!!

 

I am about to get an approval from a house I'm trying to buy- according to the bank!  (its a short sale I have waited 3 months for!)

 

I am anticipating closing issues- and know I have a wierd deposit of about $700 in my account.  I know about $150 was a neighbor paying me for research work, but frankly I don't remember the other.  I think it was mainly a yard sale and a bunch of coins I cashed in.  Maybe my sister paid me back some money.

 

The point is- I know I will probably have to explain the deposit.  So what will I need to do- probably write a letter explaining where it came from.  For what its worth- if I took the money out of what I have- I would still have money for closing (down payment is through an assistance program).

 

Thanks all!!!!

 

 

Message 1 of 10
9 REPLIES 9
Frequent Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

Kelaykay,

 

I do not have the answer to your question, but I want to ask you oneSmiley Happy.  I am also in Fla and just got preapproved for a FHA loan.  I want to apply for down payment assistance, but I don't know where to start.  I want to bid on a short sale too, but my broker is discouraging as she says it may take 3 months for an approval.  I am not in a rush, I just want to get a house at an affordable price.

 

How are you getting down payment assistance, if you don't mind me asking?

 

Thanks


Starting Score: EQ-686 TU 703
Current Score: EQ-695 TU 713
Goal Score: EQ-800 TU 800




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Message 2 of 10
New Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

Not a problem!  I am using a city based program, as I am buying within the city limits and meet the income criteria.  Also, previously I was going to use a county based program but it was discontinued.  Where are you?  I could tell you whats available if we are in the same city- doubtful- otherwise call up your county and city.  Tell them you are collecting all the information you can on homebuying assistance and become an expert in what is offered.  While digging- I found I am also eligible for a $15,000 improvement loan at 0% interest.  I was thrilled!

 

I can tell you this short sale was very difficult and thanks to a great listing agent, we are finally making progress.  He eventually had to go around the servicer- Chase (absolutely horrific at what they do) - and go straight to Freddie Mac, who got on it and fixed the problems Chase caused.  Still- this is going on three months.  I took an easy going approach since the listing agent was very good and bugging the heck out of Chase- all I could do was wait and thank the listing agent.  My offer was about $30K less than list price, but it was on the market a year and I got an appraisal which I sent with it to support my offer.

 

I was like you- I was ready for a long wait and thought it would be worth a good deal.  Assuming this actually works out- it will be a great deal!  But that is assuming it works out!  hehe- you never know!!  Even if it doesn't, I am glad I waited.  It was a sacrifice I was willing to make to get a perfect house for me.

 

For my listing agent- its a long time without getting a paycheck and a lot of work for him.  Luckily he's my dad and I did all the grunt work. Smiley Happy  For the average agent, it is understandable that it takes them so much work and so long.  You need an agent that is a bit agressive and will make sure the listing agent calls the bank daily, weekly, something like that.  If your agent is too sweet to bug the listing agent to bug the bank- it may just sit on someones desk forever- like mine was aparently doing.  If the listing agent hadn't bugged Freddie Mac, I would have never- ever- heard anything.

 

 

 

 

Message 3 of 10
Frequent Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

Kelakay,

 

I am in Martin County.  I want to offer about $30,000 less on the short sale too and she is saying no, they are not going to take that.  But at least let me try.  I know that houses are not selling right now, so at least try.

 

I think I will call up the County office and find out.  Is there a website.  You can PM me.

 

Thank you.


Starting Score: EQ-686 TU 703
Current Score: EQ-695 TU 713
Goal Score: EQ-800 TU 800




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Message 4 of 10
New Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

The trick is determining fair market value.  I got an appraisal to reflect what the house is worth, minus the cost of the repairs necessary.  And we are talking large repairs- not minor issues.  That's what I offered them.

 

Here is a link to the Martin County SHIP site.  SHIP is an acronym for State Funded Housing Initiative.  Its a program offered most places around the country.

 

http://www.martin.fl.us/portal/page?_pageid=337,1703211&_dad=portal&_schema=PORTAL&cid=90&sc=&sid=79...

 

You are always best to do your research online, then call and talk to people.  Ask them what you want to know... "So what's the trick to getting down payment assistance?  You must be an expert working for the county."  Be nice and they are usually happy to help.  See what lenders work with the program and pick one with a great reputation.  Talk to them too.

 

 

Message 5 of 10
Frequent Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

T

Thank you. Smiley Very Happy  I will call them and be nice.


Starting Score: EQ-686 TU 703
Current Score: EQ-695 TU 713
Goal Score: EQ-800 TU 800




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Message 6 of 10
Frequent Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

It will most likely depend on the underwriter and what they are looking for. Since the deposit amount isn't very large they will most likely accept the written letter of explanation. We had a situation where they questioned a couple $500 cash deposits into my wife's bank account and we just told them they were from a yard sale and that was all they needed. They didn't even ask for anything in writing. For deposits over $1,000 we provided them with explanation letters and any other supporting docs such as a copy of the deposit ticket, etc.
Message 7 of 10
Regular Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

at what point in the process did they ask for these letters, answers to deposit questions?  I got a pre-approval around Nov. 8, sent in 3 months past bank statements at that point.  My file is with underwriters now verifying everything, is this when they may request a November statement
We did it...closed 1-28-10
Message 8 of 10
Frequent Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

My guess would be that if the underwriter were to question your deposit they would most likely include it as a condition in your approval that must be met prior to closing. At that point you could just contact your LO and ask them if an explanation letter of the deposit would be ok. Since the deposit isn't very big they may not even question it. Good luck!
Message 9 of 10
Regular Contributor

Re: Deposit explanations- Getting approval with non-paycheck deposit

I would probably contact the LO earlier rather than later. Whether or not they will request explanation of the deposit probably varies based on a number of factors. You mention that you have the cash to close even without the deposit, and that's probably a good thing. However, on a USDA loan, I received numerous conditions, one of which hinged around a deposit.

 

Originally, my LO showed me that I would receive a credit at closing for property taxes already paid on the year (around $2400). In the past, apparently USDA allowed this to be reflected as cash available to close, but they no longer do. That required me to get an extra $2400 gifted. At the same time, they asked about a $750 non-automated deposit that I had made about 1.5 months prior to the application. It was the deposit back on a rental property that I had moved out of. I explained this, but UW wanted to see deposit slip and cancelled check. Since I wasn't really thinking about home purchase at the time of the deposit, I had deposited via ATM, so there was no deposit slip, and my previous landlords lived 700 miles away, and I really didn't want to bother them to try to get a cancelled check copy to me.

 

As a result, they allowed me to get the gift upped to $3200, which then negated their need to see an explanation of deposit. Long story short, because of the specific UW and/or program, even though I had well beyond what my personal share of closing costs were to be in my account, I was still being asked to provide more than just a letter of explanation for the deposit.

 

If that's going to potentially be an issue for you, better to know about it now than under the pressure of trying to get to closing later on. Good luck.

Message 10 of 10
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