Buying a Home? Know Where Your Money is at!

As you prepare to purchase a home, you probably have a lot on your mind.  You're spending time wondering where you're going to put your antique desk, not where you are keeping your down payment funds.  However, there are actually several things to keep in mind when it comes to your money.  Let's take a quick look.

First, if any of your funding is currently in an investment account, 401K, or an account that is less liquid than a savings account, you'll want to check on how long it takes to access your money.  It could take only hours for you to process a transaction and deposit the money in your standard checking or savings account.  However, some accounts could take 10 to 14 days to get your money to you!  This could cause a "speedbump" on the road to your new home.   Plan ahead, find out the specifics of each account you'll be withdrawing funds from, and perform the withdrawl early.   That way you don't put yourself at risk of breaching a contract by not having your funds in time for your contracted closing date.

Second, if you're the type of saver that likes to keep cash "under the mattress" or another secure location, you could have an extra problem.  Over the last few years, many lending laws and lenders' standards have changed for mortgages.  One issue that constantly arises is the traceability of funds.  A lender is going to want proof that any cash used for your closing funds were legally obtained and actually belong to you.  To prove this, they'll want to see bank statements that show when you earned money, where it went, and who you earned it from.  A large cash deposit into your account the month before you buy a home will look suspicous to most lenders' underwriting department, and can cause them to deny the loan approval.  If you are an individual operating as a small business and operate heavily on cash transactions, the burden of proof placed on your funds will likely be even tougher.  

Bottom line, buying a home is not something you should jump into blindly.  Plan ahead, speak to professionals, and make the process easier once you're ready.