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Show Me the Money – OK Sources of Down Payment & Closing Costs
When you meet with your clients, the conversation usually gets around to the topic of the down payment and closing costs—how much and where’s it coming from. 
Do you know what’s OKAY and what’s not okay?  While not everything is covered here, these are the most common money sources clients usually mentioned.
Acceptable Sources of Money
Deposit accounts, vested retirement accounts, stocks, bonds, trust funds Gifts (PrimeLending now allows 100% gifted down payments!) Sale of asset (home, car, boat – proof required) Secured loans: Vehicle, 401k, home equity Business assets: Accounts (with accountant letter) or sale of assets Rent-to-own: Credit toward down payment cannot exceed the difference between Market Rent and the Actual Rent paid for the last 12 months. Seller contributions: Certain percentage of the sales price depending upon LTV & Occupancy Down payment assistance: Grant funds or community loans Unacceptable Sources of Money
Undisclosed, interested-party contributions Payment abatements Sweat equity (This is complicated – sometimes yes & sometimes no) Funds that have not been vested Personal unsecured loans Cash Here’s the bottom line—if your clients share with you where the money is coming from for their down payment and closing costs, they will have to PROVE it with documentation.  ... more

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