The home buying process normally includes one or more earnest money deposits from buyers to assure sellers that they are proceeding in good faith. These deposits must be handled in a specific manner so as not to interfere with the underwriting approval process. This blog offers details on earnest money deposits for Burlington MA real estate transactions.
Origin of Funds
It is critical for buyers to use their own money for earnest money deposits. Many loans specifically require buyers to utilize personal funds for all costs related to the transaction. Buyers are normally asked to provide copies of bank statements demonstrating that the funds were already in their bank account and that earnest money deposits were withdrawn against that account. Bank accounts should also include sufficient funds for for funds payable at closing. Lenders will verify all of this information before approving a mortgage. Buyers not using their own funds may compromise their ability to obtain a home loan.
Receiving Money as Gifts
Certain financing programs permit monetary gifts to home buyers from their family members. However, home buyers should not ask family members to make earnest money deposits for them. The proper process entails a gift form, copies of account statements from the gift giver showing where the funds came from, and then bank statements from the home buyer displaying acceptance of the funds. Staying with proper procedures can lead to fewer delays when underwriters evaluate the loan application.
Getting Ready for Earnest Money Deposits For Burlington MA Real Estate Transactions
Buyers preparing for a future property purchase should take a few steps to prevent issues with their mortgage approval. First, they can make sure all money needed for earnest money deposits, down payments, and closing fees are in their own accounts and can be documented. Have at least two months of bank statements on-hand. The statements should not display any strange activity (such as large cash deposits). Lastly, when making earnest money deposits for Burlington MA real estate transactions, buyers should utilize funds from documented accounts. If accepting money as a gift, ask your mortgage consultant for the necessary procedure before accepting the gift. These precautions may reduce problems and lead to quicker underwriting approval.