Making Sure Your Cash-To-Close Comes From The Proper Source

The loan closing process is very important and there are a number of aspects that have to fall into place. It is crucial that you provide all the proper asset documentation as well as information about the source of the funds. If you use the incorrect checking account for your down payment, there is a possibility of your loan being denied, even if all the final documents have been signed; and this can be a truly frustrating situation to be in.

Acceptable Sources

Seasoning of your down payment money is almost as important as its source. This is exactly why underwriters need a minimum of 2 months of bank or asset statements right at the start of the approval process. These are some of the acceptable sources of a down payment:

  • Bank Accounts- either savings or checking

  • Investment Accounts- mutual funds or money market

  • Retirement Funds- It’s important for you to keep in mind that when you borrow against a 401K plan, a repayment will be required. This will be calculated based on the Debt-to-Income Ratio

  • Gifts – It is possible for family members to gift the down payment funds (certain restrictions apply)

  • Trust/ Inheritance Funds

  • Life Insurance- Cash value & face amount

  • Government Grants- A number of state, county & city agencies offer certain special down-payment assistance programs

Things to Remember

As a borrower, it is important for you to make sure that your loan officer has been provided complete information about the down payment. This information should go to him very early in the process. This ensures all the required questions, documentation & explanations are reviewed or approved by the underwriter. A good rule to keep in mind that all the funds you are using for the down payment should be pre-approved by the underwriter right at the start of the approval process.

Very simply, if you forget to deposit the required money in your checking-account while you are heading to the closing appointment, it will not be acceptable to get any cashier’s check from a friend, for this purpose. Always make sure that your cash-to-close has come from the proper source. It will save you a lot of trouble and frustration during the closing process. Contact ResMac Home Loans for all mortgage-related information.

 

Talk the Talk – Know the Mortgage Lingo at Closing

Know the Mortgage Lingo at Closing

Most borrowers are completely at bay about the closing process- Sure they sign all the documents but when it comes to understanding what stage the process is in, they simply nod and smile through it all. You trust your real estate & mortgage team to do everything right, but its also important to understand the terminology that is being used. Here is some of the common lingo that is used at closing.

  • Docs Sent- Buyers are always very stressed out during the approval process and are eager to know whether they meet all the qualification requirements that have been laid-out by the lender. If you hear the term docs sent- it means you have made it and that the closing department has sent all the approved paperwork on to the closing agent- the title company or an attorney.

  • Docs Signed- This means the documents have been signed. This includes all the paperwork between the lender and borrower and will have details like the contracts and terms of the loan

  • Funded – It means that the funds have now been transferred from the lender to the concerned lending agent (with all the disclosures that are required). In the case of a home purchase, if the closing has taken place in the morning, the funds will be sent that same day. If the closing takes place in the afternoon, the fund transfer will take place the following day.

  • Recorded – This is related to the recording the deed transfers title or the legal ownership of that property to the buyer. The transaction will be recorded by the attorney or the title company, in the county register of the area where the property is located. This generally takes place soon after closing.

Gaining Clarity

It helps to understand the closing lingo as it gives you more clarity about what exactly is taking place and you will be feel a little less lost with the entire closing process. The more clarity you have, the more confident you will be while speaking with the different parties involved in the process. You can also contact ResMac Home Loans for more information about application approval and to understand what the modalities are.