Letter of explanation - sky falling

[life101]

I just received word (verbally) that our mortgage app was approved. But with that they asked for a letter of explanation for 3 large deposits. I was able to show a paper trail for 2 of them and no, a rich uncle did not give it to me. These deposits were legit. The 3rd deposit also legit (no gift money here either). The problem is back before the recession I put money aside (a little here and a little there). I kept building up, even before the goverment acknoledged we were in a recession. (noting that it took them long enough to admit it lol) anway even though hubby lauphed, I stockpiled a little. Then built it up a little too much to feel confortable having it around. Before I even realized we were going to look for a home, I put some of it back in the bank. Now I have to show a paper trail.

Well all I could do is say, saved money at home and put it in the bank. (wanted to say... the sky was falling and banks needed a bailed out so I got some cash on the side). Anyway i hope telling the truth will not be a problem.

[JM-AM]

Use withdrawal dates from your banking history. Example january withdrew 200 cash, february withdrew 600 cash. This obvious only works where your checks are direct deposited and you withdraw some cash spending money as needed. This will give you a paper trail.

Also another way if do not use direct deposit is to show your daily bank deposits against your pay-stubs. If you net 1000 a week and you deposit 1st week 900 2nd week 650 3rd week 777 4th week 300. Give a bill break down and the balance was saved. Should be able to find a paper trail for this also. 

I can not think of anything else at the moment hopefully some-one will chime in with more advice.

Good Luck

[Anonymous]

When I was a realtor in NYS, another realtor had an eccentric, older client who said his down payment was "buried in the backyard" and that he needed help digging it up. Well, a bunch of us thought he was joking but went out to his house and sure enough, the guy brings out a map, so many steps north, so many steps west, etc and points down. He had over $50,000. in cash buried in various places in his backyard. I've never seen that much cash at one time and no it wasn't in all large bills.

He was told to deposit it and let it season before applying for a mortgage since he had no way to provide a paper trail for the money. He had been burying boxes of cash for years and years like that. He had many maps and a few of us wondered if we even got it all or if there was more. 

I would think the above advice is what I would do. Go through all your bank statements and whenever you withdrew cash- $200 here, $500 there, that could creat your trail. You may have to go back further than a couple months but so what, you just provide additional statements to the broker.  

[life101]

LOL, thats too funny. Too bad he didnt buy gold instead but back then not sure. But who knows, when hubby lauphed, well most likely he was right but if they did lock the bank doors he would be glad. I'm so glad he proved me wrong though lol. Anyway, so the simple explanation will not do then. Ok, thanks.

[Anonymous]

As long as you do not need that money for closing or down payment (minimum amount) then your LO should be able to just not count it as reserves/cash on hand.  You can then add it to your funds if you want to.

Otherwise, you will likely have to let the money season in the account prior to buying.

[life101]

thanks. I found the paper trail now, its a perfect match. It came out of my account in July but I did not put the money back in until September.

[JM-AM]

Always nice just to do a little hunting through the past and see something that works out perfectly!

Congrats for finding something.

Good Luck

[Anonymous]

How funny.   I expect to have the same thing happen.... I had money across a bunch of different accounts and was in the middle of consolidating it all when I triggered the mortgage app---I did it because I was scared rates were going to up, and they did... 20 basis points!

But when I sent off all my financial docos, about 400 pages worth, there's money they can't see because it was in transit to another account.   I'll probably have to send a whole new batch of statements towards the end of U/W I would imagine.   The credit, income and current debt picture though looks fantastic, it's just the money side that's all fouled up.   I did make a point to my LO that I made sure to price the mortgage so the "Cash Required" amount showing on my GFE is $3K less than what I have on hand, and I already budgeted several months for both a rent payment and the first couple mortgage payments because I'm not moving in the middle of winter when there's 3 feet of snow on the ground and ice everywhere.... and don't want to move into that house until it warms up... otherwise I would also be running two enormous gas bills!