Question for you homebuying and loan guru's

In2Win · Sep 21, 2009

I ask this question bc my brother is buying his first home and I can not believe how in depth these lenders look into your accounts to check where your money is coming from. I let him borrow 5g for his downpayment and they want me to sign a form that it is indeed a gift. One of his paychecks was 300 short of the usual and they said it didnt look like it was his normal pay so he needed to send them a copy of that particular paycheck

I have cash set aside for my 1st home the problem is how am I going to accout for this cash? I have a savings acccount that has a decent amount in it, a checking account with tons of activity some cant be accounted for and I have cash under the bed? Can I give someone money before I make the down payment and have them write a check to me as a gift?

Any suggestions?

Im sure others have ran into this in the past

TheKinz · Sep 21, 2009

Are you asking about the cash you have lying around? If so, get that in your savings account. As long as it is in there for a period of time you should not have an issue. It would look suspicious if, all of sudden, 2 weeks before an offer was made, presto money appeared. If it is in your account for a period of time you should be fine. If they ask where it came from say a garage sale!

In2Win · Sep 21, 2009

The Kinz said:
Are you asking about the cash you have lying around? If so, get that in your savings account. As long as it is in there for a period of time you should not have an issue. It would look suspicious if, all of sudden, 2 weeks before an offer was made, presto money appeared. If it is in your account for a period of time you should be fine. If they ask where it came from say a garage sale!

yes sir that is what I am asking, then will I have a problem with where this "cash" is coming from?

I like to keep some coin in the house just in case anything happens, dont completly trust banks and what if there was some disaster. I just find it ridiculous that they worry so much where your money is coming from. I mean they got suspisous about my brothers paychech that was 300 short of his usual.

What if I throw 10,000 in now and go to purchase a house in 6 weeks? Am i going to have problems?

In2Win · Sep 21, 2009

bumpity

MightyMoe · Sep 21, 2009

I can give you some of the answers you are looking for. I'm a mortgage broker and have quite a bit of experience with what you're dealing with.

Do you really think you might find a house in the next 6 weeks to buy? Banks will ask for your last 2 months bank statements. Realize that if you gave them Septembers for example and August's, that August statement would also state the prior month's ending balance. So you have to be careful that you don't have $10,000 in there when your average balance used to be $100. Also makes a bit of a difference how much you make. If you gross $6,000 or $7,000 a month, it is not that crazy to save up $10,000 over 2 months but it is if you only make 2k/month.

I would be very careful of putting all $10,000 in at once because it is a red flag for government agencies that monitor that stuff (IRS for example). If you let me know some of the other details such as income and how much money you'll actually be using for buying the house it would help me help you.

On another note, if you plan on buying a home and taking advantage of the free government cash of up to $8,000, I would not wait to long to do it. If you don't CLOSE the deal by November 30 of this year, you don't get it. The process is taking around 4-6 weeks depending on the transaction and because the government recently implemented some more laws and regs to add time to the process.

Hope that helps. I'll be up for a bit so if you have more questions let me know and I'll do my best to help you out.

Might Moe

CujoLatte · Sep 21, 2009

Hay Mighty Moe ....can I ask you a refinance question?

bellyputter · Sep 21, 2009

Have you ever heard of money laundering?

MightyMoe · Sep 21, 2009

go ahead Cujo.....what are you thinking?

In2Win · Sep 21, 2009

moe message sent

thanks

TheKinz · Sep 22, 2009

Moe- is dead on. Since your money stashed under your mattress is unknown take Moe's advice. The simple reason why they look at prior statements and your bank account is to see if YOU CAN MAKE THE MONTHLY PAYMENTS. Belly is actually correct. They have to watch for ghost owners laundering money to buy homes. They have done this type of due diligence for a long time the only difference today is that they are much more skeptical and will bring out the microscope if anything looks weird. They will be more than happy to deny your mortgage application than to take a chance. Every loan is looked at with the thought of selling it in the seconadary (investment) market. If it is not squeeky clean it will not be purchased.

Good luck and take advantage of that 8K credit if possible. Also another FYI, if you are in a FDIC insured bank your money is insured up to 100K (i believe) so you should feel safe unless you have 100K under your mattress!!

bellyputter · Sep 22, 2009

FDIC insured up to $250,000 at each individual bank.

In2Win · Sep 22, 2009

bellyputter said:
FDIC insured up to $250,000 at each individual bank.

Just to play devils advocate, what if something does happens at the banks to multiple peoples accounts? You are not going to see that FDIC $ in a looooooong time

djmatt · Sep 22, 2009

the FDIC was due to end in decemeber and has been expanded

TheKinz · Sep 22, 2009

In2Win said:
Just to play devils advocate, what if something does happens at the banks to multiple peoples accounts? You are not going to see that FDIC $ in a looooooong time

and what if your apartment burns down or is broken into while you are at work? Which way do you feel safer?

MightyMoe · Sep 22, 2009

In 2 Win,

Reply sent

As for the FDIC insuring, to the best of my knowledge it is up to $250,000 per account. I also like to keep "emergency" cash at the house but am careful not to keep too much there. Never say never. Things do happen and you don't want to be paranoid that someone will break into your home someday. I feel that banks are trustworthy but far from perfect. I think you need to "police" them from time to time or you could get hosed.

Mighty Moe

wolfie_cr · Sep 22, 2009

In2Win said:
I ask this question bc my brother is buying his first home and I can not believe how in depth these lenders look into your accounts to check where your money is coming from. I let him borrow 5g for his downpayment and they want me to sign a form that it is indeed a gift. One of his paychecks was 300 short of the usual and they said it didnt look like it was his normal pay so he needed to send them a copy of that particular paycheck

I have cash set aside for my 1st home the problem is how am I going to accout for this cash? I have a savings acccount that has a decent amount in it, a checking account with tons of activity some cant be accounted for and I have cash under the bed? Can I give someone money before I make the down payment and have them write a check to me as a gift?

Any suggestions?

Im sure others have ran into this in the past

simple solution for all this is and not knowing the magnitude of the down payment etc

simply start using the cash for day to day expenses and let the cash accumulate in the account

that takes care of the problem with no weird "here have my $ then write me a check"

In2Win · Sep 22, 2009

wolfie,

Thanks for the reply, that is the route Im trying to run right now. I was just figuring what if I find the house I want tomorrow and all of a sudden 10g shows up into my account.

I would hate to pass up a house I really like due to the fact that I can't justify this money that just "showed up" in my account.

CujoLatte · Sep 22, 2009

Here goes Mighty ..... I live in a house that is provided by my job. They pay all the bills including cut the grass. I have no debt except my investment property and a $444 car payment. My shore house (investment property) is in OC MD. I owe 190,000 on the mortgage and the house is worth about 240,000. The rate is 6.25%. Household income of about 110,000 yr. A wife and 3 kids. Is it even worth it to refi??? I know I pay a higher rate because it is an investment property.

Thanks in advance with your help!

:money8:

1cheater · Sep 22, 2009

I would just buy the house and double or triple up on payments after a couple months in.

MightyMoe · Sep 23, 2009

CUJO,

You are best off to stick with what you have. As long as you have a fixed rate on the property and your rate is 6.25%, you are doing fine for an investment property. Yesterday's rates with my lenders was around 5.25%-5.375% on a 30 yr fixed mortgage for PRIMARY residents. Since investment property is such a huge risk for banks, you would take a big hit to your rate to refi.

Most of my banks, if not all, require that you have 25% in equity on an investment refi which would mean your home would need to be worth closer to 260k to make it work. Just to give you some peace of mind and put this to rest and you can move on. Let's say you can get your rate down a 1/2 point to 5.75%. On a $190,000 loan over 30yrs, you would only be saving around $61/month.

If your closing costs were around $2,200, it would take you 3 yrs to "recapture" your closing costs and then start actually saving money. Don't forget that you have already been paying on this home and you would go back to 30 more years!

Does that answer your question? Hope it helps. Have a great day!

Mighty Moe