Lets talk a bit about the down payment and/or cost of doing a loan. Where is that money coming from?
I hope you are reading this because buying a home is just a glimmer in your eye and you want to get your ducks in a row before buying a home.
Usually I tell people your 1st step is getting pre-approved by a lender - but really your first step is saving money for the Down Payment and closing cost, and seasoning that money.
What is seasoned money you ask? It is money that has been in your account for more then 2 months. But you say your parents are loaning you the down payment for the home, so won't this work? Well a FHA loan will allow your parents to "gift" you the money, but............they need to sign a statement this is really a gift that you are not to pay back ( or it will be considered a loan and added to your debt ratio). And some lenders will want to know where that money came from that your parents gave you. So your parents may have to show where they got it from.
This is what we call a paper trail. All monies have to be documented - money can not just fly out of the sky! I still to this day have people that save their money in their mattress at home, and want to deposit it when they are ready to buy, not going to work in today's market.
The lender is going to want to see 2 months of the most current bank statement, ( and they may ask again before closing) There better not be any big deposits you can not give a good paper trail to. So if you normally deposit $1,000 every 2 weeks and all of a sudden there is a $5,000 deposit into your account, they are going to want to know who, what and where.
So empty the mattress and open an account at your local bank and season that money!
Then go get a pre-approval from a lender.............
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