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Underwriting, bank statements and deposits

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Underwriting, bank statements and deposits

Another message in a recent thread prompted this question. We are about T-minus 4 months from lender shopping, and because lenders require 2-3 months of recent bank statements, we want to start getting our ducks in a row this month, as we might be required to submit Jan, Feb and March bank statements. So I have 3 questions on this:

 

1) What type of deposits need to show up *before* the statements we submit? I assume these are gifts, etc.

 

2) What types of deposits can be explained? For example, when coming up with a down payment, I have several options for helping to come up with the total. I can liquify some mutual funds, take against Simple IRA as a first time home buyer, recoup promissory notes, etc. I ultimately don't know what amount of a down payment I will need, so I don't want to do this if I don't have to, thus, I don't want to do any of these now now. But if they were needed closer to home purchase time, they would show up as large deposits on recent statements. Is this ok? After all, it's still my saved money.

 

3) Aside from random deposits that are not paycheck-related, what else do they look at on these bank statements? My current DTI is 0, but do they look for specific rent payments, etc? Any other transactions?

 

Thanks for any help...

Message 1 of 13
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Re: Underwriting, bank statements and deposits

1. Gifts can show up in the middle of the statements but may require a letter of explanation (LOX). It's not always a given that lenders will go off of 2-3 months of statements.  I've heard of people being asked up to 12 months of bank statements. My girlfriend deposited 800 in my account and forseeing this issue I had her write an LOX stating that the money was a gift and she isn't seeking repayment. My loan officer told me it was fine that I had that on hand just in case it would become an issue and that would be all that is needed.

 

2. if you can provide statements showing that you are withdrawing from your liquids for home-buying purposes then you should be fine.

 

3. Bank statements are used to determine spending habits, saving habits, and that money being deposited is actually coming from a verified source and is not going to put you in further debt after the mortgage. If you have random deposits and cannot verify where or what its from then its a huge red flag. If you do side business and are making deposits related to such business then you should also have state and federal tax statements proving such. If your lender requires a verification of rent (VOR) and you cannot provide canceled checks then they may ask the property management (or landlord) to fill out the VOR.

Message 2 of 13
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Re: Underwriting, bank statements and deposits

If you can, keep it as simple as possible.

 

We have multiple accounts.   So have the majority of the paycheck going into one checking account.  We have a direct deposit into savings.   Did all of our moving funds before we applied for a mortgage.

 

All the misc things that come in now, like travel reimbursement, we have go to a different bank account - one that we don't have as a main account and didn't include as an asset for the loan.   We also pay as many bills as we can from that account, for variables like food & gas.   The main account, the one that is listed on our app, we pay utilities from.

 

As someone else said, LOX's are ok and usually accepted.   I don't know about cashing out other assets.   I was asked if the funds were coming from a TSP account.   I said no, we saved it the old fashioned way.   So I am not sure if they want something different for cashing out or borrowing from assets.   

 

You can call and get general information from the people you want to borrow from.  The bank we thought was our preferred lender - well, we actually found another bank that we want to work with when we did our homework and called several lenders.  Kinda surprised us, but since we found the lender we want to work with (ING Direct), we knew our what our spending limits were, how much we needed to put down, and approximately what our closing costs were to be.   We built off of that number to set up a savings goal.   If we ever get to closing, we will have that much saved up.

Message 3 of 13
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Re: Underwriting, bank statements and deposits

Thanks for the input.

 

On the two separate account approach, if closing costs aren't paid by the seller and aren't rolled into the loan (i.e., paid out of pocket by the buyer), can these be paid from either account, or do closing costs specifically have to be paid from the account that has been monitored by underwriters? Ditto question for good faith payments?

 

Thanks.

Message 4 of 13
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Re: Underwriting, bank statements and deposits

IMO, the funds in the account that the underwriter sees should have the down payment and 2 months reserves and closing costs, if you will need to pay them.   When it actually comes time to close, they won't know or care where the money comes from since you have to bring certified funds.

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Re: Underwriting, bank statements and deposits


@IOBA wrote:

IMO, the funds in the account that the underwriter sees should have the down payment and 2 months reserves and closing costs, if you will need to pay them.   When it actually comes time to close, they won't know or care where the money comes from since you have to bring certified funds.


Thanks for all this specific info. I was having trouble getting this level of detail, so I really appreciate this.

 

Are "2 months reserves":

- simply 2 months of proposed mortgage (PITI) payments

- 2 months of all proposed debt payments (mortgage, cars, CCs, SL,) - I will only have a mortgage payment

- 2 months of all projected expenses (all debt, utilities, food, gas, etc.)

 

Also, if the underwriter sees amount A in month Y and approves a lended / down payment amount, but I am actually able to save amount B in month Z (maybe two months later), can I actually increase my downpayment amount over what the underwrite agreed to / saw in the account? Or am I then locked into that down payment amount when the underwriter ok's everything?

 

Thanks.

Message 6 of 13
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Re: Underwriting, bank statements and deposits

I don't want to scare you, so please understand these are my numbers for where I live.

 

When I bought my last house, I was determined to put 20% down to avoid PMI.   I told my lender that.   My lender said I had the best chance of getting a loan and the best interest rate if I went the FHA route.  

 

In the bank, on my bank statements, I showed enough money to put the 3% down required by FHA, plus two months reserves of the mortgage payment.  The bank statements actually showed enough to put 20% down, but the lender did not care since he wanted FHA approval and all was needed was 3%.  

 

The afternoon before closing, I received a call from the title company.   They wanted to know how much I was putting down so they could give me a final number.  I told them 20% of the purchase price.   They ran their figures based on the down payment and told me how much I needed to bring to closing.   (By now, the underwriter is finished with the paperwork/the deal.  The UW is out of the picture.)   The title company also called the lender and told them how much needed to be wired over for the close.

 

I went to the bank, did a cash advance off of my Discover card (7k) and borrowed 25k from my line of credit.   I got my certified funds for 32k from my credit union.  I then went to my bank which had my savings and another certified check for the balance needed (37k).  I don't remember exact figures, but I want to say I had to bring 79k to the table.    I think I had put 1k in ernest money - which was a lot back then.   But it could have been 5k.

 

The lender never knew I borrowed from my cc and line of credit.  I paid it back within a month.   The reason I took funds from those two sources is because I was scared, so scared, that I would need the money still in savings (40k) to help me get through the first couple of months of home ownership.    I also had no furniture.  Smiley Sad   No dishes.   No silverware.   Nada.   I would not recommend borrowing money to go to closing.

 

In this case, the underwriter saw that I had adequate funds to do the deal and have leftover money.

 

***

 

In my current situation, I am under contract for a house.  I want to put 20% down.  I am approved for a conventional loan, but qualify for FHA as well, so I have options if I can't save up the full 20% plus closing costs.    

 

I have put 5k in ernest money down.  I have (as of this week) 63k saved.   I need to go to closing with 68k in hand.  Plus I need to pay for my home owner inspection and pest inspection.  I will put my home & pest inspection on a cc that won't report until after closing.  (I know when the statements close and when the banks update the CB.)  OR I will pay for those inspections from another account that I am not claiming as an asset on the loan application.

 

So right now, I am about 5k short of needed funds to close with the loan terms I want.  I am ok, cuz I can dictate up to the day before how  much I put down.   BUT I still want to do the 20% down so there is no PMI or escrow.

 

What the lender sees is a direct deposit each payday into the savings account.  I am about 3 months from closing (delay due to the seller having an issue with their mortgage company).   By the time we get to closing -- if we ever do on this house -- I should have enough saved to cover 20% down plus closing costs.   

 

When we reactivate the file, the underwriter will request 2 months of statements.   Even if I don't have enough at that time to close, I will be able to show a history of regular deposits, that if kept on schedule, would give me enough in that final month to close.   The underwrite **might ask** for one more bank statement before close.

 

For the two months reserves - the lender has already said they will take into account that the only debt payment is about $182 a month, so I have plenty of wiggle room on DTI.    They will also take into consideration that I have been putting away nearly double what the mortgage payment will be into savings each month AND maintaining my current place  and bills.  

 

What does that look like?   My project mortgage payment if I were to lock in right now, would be about $1,110 a month.  I put $1,000 into savings each payday (every two weeks).  Then I usually try to add a few dollars to that in between payday.  The underwriter doesn't know I am shivering in my thread bare clothes or on the Top Ramon diet.   All the underwriter sees is "Wow, she's pretending she already has a mortgage and still pays her normal bills and still saves extra each month!   She will have no problem with a mortgage of about $1110.  APPROVED."

 

My current numbers:

Purchase price 350k

Seller pays 5k at closing

20% down of 350k is 70k

Closing costs 7.1k

 

350,000 purchase price

+  7,100 closing costs

357,100 needed for closing

 

357,100 needed for closing

-   5,000 seller pays at closing

-   5,000 ernest money

347,100 needed for closing

 

347,100 needed for closing

- 70,000 my 20% down of the purchase price

-   7,100 closing costs

270,000 loan amount from bank (financing 80% of the purchase price)

 

I need to bring

 

70,000 20% of the purchase price

+7,100 closing costs

- 5,000 ernest money

- 5,000 seller paying at closing

67,100  <--- total due at closing from me.

 

 

67,1000  <--- don't have it yet.  Subject to change based on the interest rate at the time I can lock down the rate.  Subject to change based on the actual closing costs.   No one will know the final figures until the day before closing.

 

So ideally, I would have 

 

67,100 needed for closing

+2,220 in savings for 2 months reserves for the mortgage payment

+1,000 in savings for "what ifs" --- things like the closing costs are higher than projected, just so I have wiggle room

+   700 in savings for 2 months reserves of property taxes (I pay my own taxes, no escrow)

+   116 in savings for 2 months reservers of property insurance (my policy will be prepaid for 1 yr prior to closing)

71,136 ideal funds in savings

 

These are JUST examples.   They are my real numbers.   Each UW is different and has a different set of requirements.  

 

To answer the question about reserves -- the UW usually wants to see 2 months reserves of the mortgage payment.   Escrow is usually included in that payment and will cover taxes and insurance.   If you do NOT have escrow, they will want to see 2 months reservers of taxes and insurance as well.

 

What you do with your money after closing is your business.   But it is always a good idea to have several months of mortgage payments tucked away.

 

 

 

Message 7 of 13
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Re: Underwriting, bank statements and deposits

Ps - funny how things cycle around...I have very little furniture now, but I do have plasticware!    I also have a set of dishes, still in the box, bought this past summer, in anticipation of a house.   I needed the dishes.   

 

Everything else is on hold until either we close or we are released from the deal.   I think I am personally hoping for the later.  As time passes, the market continues to drop in this area.   And I don't see the sellers/mortgage company being willing to drop the price even further.   And I dread having to try to renegotiate if the appraisal comes back for less than the purchase price.   The possibility continues to grow that that WILL happen!   

 

Oh well, if it's meant to be, then it will happen.   Until then, I am on hold for almost everything in life.   Smiley Happy   No major spending that will show up somewhere that an UW can see.  Smiley Happy    Life is still good.   And Top Ramon still tastes ok.   Especially when it goes on sale (generic brand) for 21 cents a package, limited flavors!

Message 8 of 13
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Re: Underwriting, bank statements and deposits

Your continued responses and anecdotal details are very much appreciated.

Your current situation sounds extremely similar to mine. I am hoping to close in August, which means that I will start shopping for lenders and homes in April. So starting in January, I want the UW-scrutinized bank account in proper condition. What this means is that I want all "odd" deposits to post in December, and I want a model train of savings and expenses to be shown January on, including that I can handle the proposed mortgage payment (my current rent payment is exactly the same as the proposed principal, tax and home owners insurance amount) while still being able to illustrate the saving of an ample amount per month.

My budget and area are priced almost exactly the same as yours. When the time comes, I am hoping to negotiate a ~$370k house down to ~$350k (so a 20% downpayment would be $70k). Talking to a realtor in the area, worst case is usually 5% good faith and 3% closing costs. So I might need to be responsible for $80k total. Right now, I'm about $37k liquid savings with another $30k available through other liquidable optional assets, etc. And still have 7 months to save before I close. I'm pretty sure that both conventional and FHA will be available to me as well. And funny you mention possibly waiting for prices to drop further. I'm also hoping they drop another 5% before next summer.

A few more questions, if you have the time:

1) If I have qualified for multiple loan types (USDA, HFA, conventional), at what point do I have to lock in what type of loan I will be utilizing? I'm assuming it is prior to closing, but how prior? At what point in all this is that decided?

 

2) From what you said, the final loan terms and conditions, and whether PMI is applied, are set after the title company contacts the lender with the final numbers right before closing. So when I bring my certified money to closing, I should definitely know whether my loan has PMI or not. Is my understanding correct? Just want to avoid any surprises.

 

3) The amount of earnest money doesn't really matter to me, nor scare me, as it ultimately contributes to the downpayment amount. Whether I pay 1% now and 19% at closing or 5% now and 15% at closing  is neither here nor there, as I am going to have pretty close to 20% anyway when this all starts. Is my logic and understanding on this correct?

4) I know you say that borrowing money for closing is not a good idea, but my understanding is that PMI is the devil, and should be avoided at all costs. I have been saving, preparing and striving to avoid PMI and put 20% down for a long time. Many PMI policies don't let you remove the PMI for 5 years, even if 20% equity is attained before then. In that case, and with the amount I am going to be lended, this PMI could literally be $15000 down the drain. To avoid this by borrowing seems worth it in this case. Would you agree?

5) Just curious, on the amount you are probably going to be lended, how you were able to receive a proposed mortgage payment of $1100. With an interest of 4% and a lended amount of $280k, I get an amount of $1400. After property tax in my area and home owner's insurance, it's close to $2000 per month.

6) I'm going to attempt to apply for this mortgage myself in its entirety, with my income out of the "UW account". Along with bank statements, I know I also have to supply 2 years of tax returns. Will it pose a problem if I apply individually, but my tax returns show I filed jointly with DW?

7) If I have to show that I, alone, can handle the down payment, closing costs, good faith, and 2 months emergency reserves, what can DW do to help on the sidelines from her account and CC, that won't rock the boat on the whole process? Can she pay for the appraisal inspection, etc? Other similar costs? Anything else?

8) You mention your Ramen diet and ragged clothes. Would an underwriter notice that and say "hey, things look great, but there are literally no or minimal grocery purchases. Or clothing purchases, for that matter. Something is fishy here". How closely do they go into things? If they only care about a regular rent payment showing up, regular paycheck income, and the fact that I am able to save monthly, is that enough for them? If so, maybe DW can pay for food, clothing and everything else, while I pay only for rent and util. Or I can put one small grocery expense on my account per month, to paint a more complete picture.

Again, much appreciated.

Message 9 of 13
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Re: Underwriting, bank statements and deposits

Your current situation sounds extremely similar to mine. I am hoping to close in August, which means that I will start shopping for lenders and homes in April. So starting in January, I want the UW-scrutinized bank account in proper condition. What this means is that I want all "odd" deposits to post in December, and I want a model train of savings and expenses to be shown January on, including that I can handle the proposed mortgage payment (my current rent payment is exactly the same as the proposed principal, tax and home owners insurance amount) while still being able to illustrate the saving of an ample amount per month.

 

It's a great idea to get things settled into accounts prior to applying for a mortgage.   In general, the amount of time it takes from finding a house and closing is 30-45 days.  You can go to a lender and apply for a mortgage to get pre-approved.  Only go to one company for this.  (They have to pull your credit to pre-approve you for a mortgage.)   Start scouting the market BEFORE you go to a lender, so you have a feel for what the market has to offer that might match your needs and your wants.

 

I used online mortgage calculators to get an idea of what I could afford.   The numbers differed by more than 125k.  Figured out what I was comfortable with.  


I actually scouted the market first.  When I would see a house I was interested in, I would go home and Google the address.   From there, I could see all the details of the house and the sale information.   When I found the house I wanted, THEN I called a local lender and applied for a mortgage.  I had hoped to close within 30-45 days.   Ah, but the fates were not with me.   The universe was telling me that it was not meant to be, so I walked away.

 

When I found the second house, literally the day before I walked away from the first house, I called the lender and asked for a different letter of pre-approval for the amount I was willing to pay on the house.  The offer, like the one on the first house, was a fair  market offer.   

My budget and area are priced almost exactly the same as yours. When the time comes, I am hoping to negotiate a ~$370k house down to ~$350k (so a 20% downpayment would be $70k). Talking to a realtor in the area, worst case is usually 5% good faith and 3% closing costs. So I might need to be responsible for $80k total. Right now, I'm about $37k liquid savings with another $30k available through other liquidable optional assets, etc. And still have 7 months to save before I close. I'm pretty sure that both conventional and FHA will be available to me as well. And funny you mention possibly waiting for prices to drop further. I'm also hoping they drop another 5% before next summer.

 

To avoid questions later, it might be a good idea to put all of the liquid assets into the savings account BEFORE you have them show up on statements you turn into the lender/UW.  Different lenders have different opinions and rules for cashing out assets to be used to purchase a home.   Use the 7 months to save, save, save!  Even when it's tempting, don't touch the money.  If you have more than enough money to put 20% down, plus closing costs, plus 2 months + reserves, you should go through the process faster.   In theory, the UW has to spend less time worrying if you can afford the mortgage or not.

 

I am not waiting for prices to drop further, exactly.  I am under contract, but here we are in the second month.   I had hoped to close before Thanksgiving and it didn't happen.  The appraisal has not even been ordered yet.   But as I watch the market around me drop, I know the value of the house I had put an offer on is also dropping.  If the it's taking this long to get going (the owners had problems with their lender), by the time we get around to an appraisal, there is a strong change the appraisal will come in less than the contract price.   Which means walking away or renegotiating.   The delay can be time consuming.  <-- oxy moron, I know.  Smiley Happy

 

My original loan application has since expired.   So now, once the lender and owner finish their fighting, and if things get back on track, I will have to reapply for a mortgage.   The credit scores are high enough to qualify for both an FHA and a conventional.   One of the things I learned with the other house deal years ago was if the loan program is called FHA, and I put 20% down, I still have to pay PMI.  It's an FHA thing.

A few more questions, if you have the time:

1) If I have qualified for multiple loan types (USDA, HFA, conventional), at what point do I have to lock in what type of loan I will be utilizing? I'm assuming it is prior to closing, but how prior? At what point in all this is that decided?

 

I would not apply for a loan until you find the house you want to purchase.  Use the online mortgage calculators from different sources and get an idea of what you can borrow and what your loan amount would be.  The calculators told me $323k to $500k.  I decided since the majority of the numbers came in about $400k+, that I would use $400k as a baseline.   Those payments, at $400k, were uncomfortable.   And I couldn't save the 20% down to avoid PMI and escrow.  So I played with the numbers and decided $350k was the MAX I would pay for a house.   With that ceiling, I redid the numbers for down payment and mortgage payments.  I am comfortable with the numbers.

 

I found a house to purchase.

I told my realtor - this is it, let's write a contract.  Is $350k a fair market price?  Can we meet at 5pm tonight?

I went to my lender, applied for a mortgage, and told him the purchase price.  

I asked for a pre-approved letter for the amount I was offering on the house.

I met with the realtor, signed the contract, handed over 5k in ernest money.

 

***Once you have a ratified contract (everyone involved agrees on the purchase price, the closing terms, the date of proposed closing, all docs are signed), then call your lender and lock in your rate.  You will need to give your lender a copy of the ratified contract along with your docs.***

 

The time the interest rate is locked in varies with each lender.   Some are locked in for as little as 14 days and some as long as 45 days.   More and more lenders are requiring a "fee" to lock in the rate.  I personally object to this "fee".

 

2) From what you said, the final loan terms and conditions, and whether PMI is applied, are set after the title company contacts the lender with the final numbers right before closing. So when I bring my certified money to closing, I should definitely know whether my loan has PMI or not. Is my understanding correct? Just want to avoid any surprises.

 

Your type of loan is between you and the bank.   In my case, the bank said FHA is the easiest to get approved.  I said ok.  Got FHA approval.   They only required 3% down at the time.  FHA requires PMI no matter how  much you put down.   At the time, I did not know this.  And my lender, who knew I wanted to avoid escrow and PMI said nothing to me about this.

 

When your title company calls you to tell you how much to bring to the table, they have already talked to your lender and know what you qualify for.  In my case, the lender had told them it was an FHA loan.  So they tallied up the numbers based on a standard FHA loan.   When they called me, I informed them I was putting 20% down.  They reworked the numbers.  Gave me a new figure to bring to closing.   They contacted the lender again and told them how much to wire over based on my larger down payment.

 

My lender knew that PMI was attached to the loan.  The title company knew too, since a portion of my closing costs were to prepay PMI.   No one told me that I was still stuck with PMI despite putting 20% down.  But yes, you will know prior to closing what type of loan you are doing and if PMI is required.  ASK if you are unsure.   Ask your lender.

 

3) The amount of earnest money doesn't really matter to me, nor scare me, as it ultimately contributes to the downpayment amount. Whether I pay 1% now and 19% at closing or 5% now and 15% at closing  is neither here nor there, as I am going to have pretty close to 20% anyway when this all starts. Is my logic and understanding on this correct?

 

I take the approach of letting the seller know I am serious about my offer on the property.    So I include a pre-approval letter, proof of deposits/down payment, and a large (larger than the "standard") amount of ernest money.  By putting 5k down, when I only had to put $100 down in ernest money sent the seller a $$$$ (loud) message.  I definitely have a vested interest in seeing the purchase close because I risk loosing my 5k if I walk away.  (Under certain conditions, I can walk away with my money.)

 

From a seller's prospective, if they receive two offers for roughly the same amount and one is just an offer with a small amount of ernest money, say $500 and the other offer has a pre-approval letter, $5k in ernest money, and proof of down payment, which deal is more likely to close?

4) I know you say that borrowing money for closing is not a good idea, but my understanding is that PMI is the devil, and should be avoided at all costs. I have been saving, preparing and striving to avoid PMI and put 20% down for a long time. Many PMI policies don't let you remove the PMI for 5 years, even if 20% equity is attained before then. In that case, and with the amount I am going to be lended, this PMI could literally be $15000 down the drain. To avoid this by borrowing seems worth it in this case. Would you agree?

 

PMI is the devil's closest cousin, twin brother, and anything else.  You are right.  Once you have PMI on the mortgage, you have to pay for 5 yrs (even if you have 20% equity in the property)  -- five FULL years of payments -- before you can apply to have it removed.  You have to submit a written request to your lender.   If they say ok, then you have to pay for a real appraisal and must have at least 78% equity in the property.   The details may vary a little with each lender.  After the numbers are worked out, then they decide if they will approve or deny the request to remove the PMI.  Did I mention that you must have perfect payment history?

 

If you have to borrow to avoid PMI, get it in the bank NOW so you don't have to answer UW questions about where the money came from!!   Liquidate your assets, move the money to one savings account.   The preference is to have the money that you borrow not show up on any CR.  From a different perspective, if you have to borrow more than a 1k to avoid PMI, are you really able to afford that house?   You should be able to save the money without having to borrow.

 

I took things a step further.  Got the chunk of change in one bank.  Called them up and asked for a higher interest rate.   I was able to get my interest rate boosted to 1% for the next year (I think it's a year).   AND my money is in a savings account.  It's not locked up or tied down.

5) Just curious, on the amount you are probably going to be lended, how you were able to receive a proposed mortgage payment of $1100. With an interest of 4% and a lended amount of $280k, I get an amount of $1400. After property tax in my area and home owner's insurance, it's close to $2000 per month.

 

The interest rate I would have is 2.875% - payment $1,106.00.  I rounded up on the payment since interest rate changes by the minute.  I also rounded up on the taxes and the insurance.  I already called the insurance company, received a quote, and rounded up to the nearest hundred. 

 

If you know your are looking at paying 2k a month for a mortgage, it would be great if you could save 2k a month in a special account so that the lender can see you already act like you have a mortgage.

6) I'm going to attempt to apply for this mortgage myself in its entirety, with my income out of the "UW account". Along with bank statements, I know I also have to supply 2 years of tax returns. Will it pose a problem if I apply individually, but my tax returns show I filed jointly with DW?

 

What state are you going to be living in?   Some states are community property states and will require that DW signs off on the title or is included on the title.   Most mortgage companies calculate a number/dollar value for each dependent.   They roll it into your debt.  This is a relatively new practice.   One lender said they figure $300 a person comes off the top of the income.   So, we have 3 of us, they take the gross income and deduct $900 to get a new number to work into the fold.  

 

I don't think it will be a major issue with the UW.   Since you are not married yet, consider filing MFS (married filing separately).  It will be cleaner with the UW.

7) If I have to show that I, alone, can handle the down payment, closing costs, good faith, and 2 months emergency reserves, what can DW do to help on the sidelines from her account and CC, that won't rock the boat on the whole process? Can she pay for the appraisal inspection, etc? Other similar costs? Anything else?

 

There is a chance the savvy lender or UW will pull DW's credit as well or tell you that since you are married you have to disclose her debts as yours too.  Depends on your state -- community property or not?   She needs to follow the same diligent financial path you are taking.  Save, save, save!  No major spending.  No applying for more credit.  Put a bandaid on that car and keep driving it!   And after you close on your house, keep living the same way for at least 6 months.   You have no idea  what will happen after you move in.  OR what the utilities are like.


8) You mention your Ramen diet and ragged clothes. Would an underwriter notice that and say "hey, things look great, but there are literally no or minimal grocery purchases. Or clothing purchases, for that matter. Something is fishy here". How closely do they go into things? If they only care about a regular rent payment showing up, regular paycheck income, and the fact that I am able to save monthly, is that enough for them? If so, maybe DW can pay for food, clothing and everything else, while I pay only for rent and util. Or I can put one small grocery expense on my account per month, to paint a more complete picture.

 

If you are super tight on the financial numbers, the UW may ask for a current and/or a house budget.   They want to make sure you are aware of the costs.  Typically, the UW don't care what you spend for food or clothes UNLESS it's a repeated, high expense.   I have the one account for "house savings".   Regular direct deposits go into that account.  The UW will focus on that one for down payment and closing costs.   The attached checking account shows small amounts leaving it for a small bill and utilities.  I pay food and gas out of a different account the UW doesn't see.   I am not actively "hiding" stuff from the UW, but I don't want to confuse the issue.   They care about income (W-2's show that as well as LES statements), saved money (house saving account covers this), and no overdraws on checking (no problem).

 

My insurance, gas, food, taxes, car spa days, etc go on the cc.   I pay as I go.  i charge, I pay.   But I pay mostly from another account that receives a direct deposit from the paycheck.   The lender asked the UW if they will require to see that bank statement and was told no because I can show savings into a designated account.   But if they do, I can say it pays the cc for basics.  

 

The UW really doesn't care about the day to day stuff unless it could affect the ability to qualify or pay for the loan.   

 

I get travel reimbursements.   They go into the other account and help pay expenses.  

 

I will NEVER see the UW in person.   And the UW will NEVER see even so much as a picture of me, other than from the driver's license.  And you *know* that picture is not so good and the UW would never be able to recognize me from that photo!!!  Smiley Wink

 

Next set of questions...?  Smiley Happy

 

PS - make sure the accounts are in your name only - not joint with anyone.   It will keep things simple for the UW.

Message 10 of 13
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