Accounting For Your Deposits

As crazy as it may sound, deposits are causing some problems with loan approval in this time of more

 stringent guidelines for mortgage loans.  Whether it's here in the Beach Areas or anywhere else, the story's the same...

Having the funds in your bank account isn't enough anymore.  In fact, having the funds for closing in your bank account isn't enough any more.  In fact, sometimes having reserve funds in your bank account isn't even enough any more.

It's true.  Lenders are scrutinizing bank statements like never before...especially any deposits outside of your normal paycheck deposits.  There is a great article in the Orange County Register about this and it offers some smart suggestions.  Be ready to explain any deposits that are above and beyond your normal income deposits:  

• All checks deposited within two months of your transaction (make a copy) 
• Checks from friends to reimburse for gifts, such as a wedding shower
• Birthday checks from relatives
• Reimbursement checks from supplies provided for school functions, scout functions, etc.
• If you own rentals do not take cash out when you deposit tenants rent checks.  Copy checks and make the full deposit that matches the rental agreement.
• Alimony and child support checks should be copied.  Often these payments are made twice per month, copy the checks to show the total for the month matches the divorce decree or judicial decree.
• Self-employed: Keep a separate business account to run your revenue and expenses from.  When you make a compensation payment to yourself be prepared to trace the check back to your business account.
• If taking out a large sum from your business account that is more than what is seen as your ‘regular salary’ be prepared to show that taking such a sum from your business will not harm the business
• Don't deposit cash if you can avoid it as it is untraceable and can cause issues.  Deals have almost come apart from large cash deposits when people got lucky in Vegas, etc. and deposited the cash into their account (smart choice, but underwriters don’t like it)

To read the article and other real estate news in the Beach Areas, click here

Having the money isn't enough any more.  Lenders want to be able to trace the money in your account to its source.  Guidelines are more stringent than ever, but if you're aware of this and follow these guidelines for deposits outside the norm, you should be in good shape.  If you're on the market to buy in Huntington Beach and the beach areas, a good real estate professional will make you aware of these scenarios and save you both time and stress as you move toward the closing table.