All Hallow’s Eve – What does it all mean?

Posted on October 29, 2011 by admin


All Hallow’s Eve – What does it all mean?  Some Fun Facts….

The word Halloween comes from ALL Hallows’ Eve, a Christian celebration that takes place the night before All Saints’ Day.  The holiday has ancient pagan roots, and today it’s also a high holy day for Wicca, the nature-oriented and ancient religion dominated by white witches.

 

The ancient Celtic end of summer harvest festival called Samhain took place on November 1st.  It was believed that on this day, the world of the gods would be visible to humans.  Since this was a time when the souls of the dead were believed to visit homes and leave messages in dreams, many fortune tellers felt that it was the best time to predict future events.

 

Leaving food out for the dead came about because ancient people felt that ghosts might be hungry after a year of being deprived, but if they were given food, the spirits would leave everyone alone… and TRICK or TREAT was born.

Dunking for apples wasn’t just a game.  It was a ritual of good fortune.  The more apples you could get, the better your luck would be during the following year.  If a maiden was able to snag an apple, she was sure to be married within a year.

Bonfires were set in the hopes that the sun would come out and stay for longer periods of time so that the harvest would yield more crops.  The bonfires also attracted mosquitos, which in turn attracted owls and bats – who were therefore incorporated in the whole of All Hallow’s Eve mythology.  And the lighting of bonfires was also a way to ward of evil spirits.  They were also supposed to encourage fairies to come out of the mounds and walk among us and some people believe that’s why we dress up to become something we’re not.  Costumes and masks were believed to confuse or frighten away evil spirits.

The Irish and Scottish are responsible for the tradition of carving Jack-o-lanterns, which was part of their harvest celebration.  Originally they carved faces in turnips and potatoes, but when they emigrated to America, they began carving pumpkins as well.  The lighting of a candle in the jack-o-lantern is the same as the Druids lighting fires, it also showed the souls of the departed where to go, and was a protection against evil spirits.

Halloween was believed to be the easiest time to contact the dead because the veil was supposedly at its thinnest.

Happy Halloween everyone!

 

 

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Be Scared! Be Very very Scared!

Posted on October 20, 2011 by admin

Be Scared! Be very very Scared!

 

On the theme of Halloween, I feel that it’s a perfect time to talk about being scared in the real estate industry on a daily basis.  Scared of what?  Scared of NOT going to jail of course!

I’m bringing this up because today, I may have lost a realtor partner, but I gained my freedom!

This conversation is becoming more and more prevalant and I’m only trying to EDUCATE those that don’t realize that you can GO TO JAIL for things that you may have done in the past few years without blinking an eye.

 

 

 

 

EXAMPLE # 1 – REALTOR, BUYER AND MORTGAGE REP CAN GO TO JAIL

I was asked from one of my realtors to qualify a buyer a few months ago.  Unfortunately he is in the process of losing his home and would not qualify for a new mortgage at this time.  Today I received a call from the same agent who apparently had continued to show him properties over the following weeks (un- benounced to me) and was ready to put an offer in and needed a prequal letter from me.  And I was told not to worry because his daughter was going to buy it in her name.

WHAT?  Hold the phone mable!

So I request the information from the daughter only to find out that she herself lost her home to foreclosure a few years ago.  Now, she WAS able to obtain a new mortgage under FHA financing because of the time period that passed from her foreclosure, however……….obtaining an FHA loan would mean an OWNER OCCUPIED mortgage and she currently lived and worked 40+ miles away from the home her father wanted to buy (Los Angeles traffic which could be a 2.5-3 hour commute each way).

Dear Mr. Realtor….regardless of the fact that I KNOW she is not going to occupy the residence, even if i WANTED to pretend i didn’t know, (which I won’t do)  there is NO WAY an underwriter would BELIEVE that she was going to move and turn her 10 minute commute to work to a possible 6 hour daily commute.  And by the way, this is considered MORTGAGE FRAUD and YOU could go to jail along with me.  Mr. Realtor said, no I can’t, I would just say that she TOLD me she was going to live there, so i didn’t know anything.   You are defrauding the bank. This is OCCUPANCY fraud.

THIS IS WHERE MOST REALTORS ARE WRONG…….did you know that the FBI is sending agents to doc signings to investigate fraud on the spot?  Yes, you heard me right.  Did you know that if you play dumb, not only would the judge say “It’s your JOB to know!”, the FBI would go through all your emails and files to prove that you did know?  And that you would be prosecuted for conspiracy of mortgage fraud?  Do you look good in orange?  I sure don’t.!

If you don’t believe that the FBI is investigating in your backyard, here are just a few more examples.

EXAMPLE # 2  - PARALEGAL GOES TO  JAIL

Paralegal sentenced to 3 years in prison for her part in mortgage fraud:  her part? Preparing loan documents and doing doc signings for files that turned out to be fraudelent.  Full story HERE

EXAMPLE # 3. - BUYERS FACE 3 YEARS IN JAIL

Mesa police officer and wife arrested on mortgage fraud for pretending to separate in order to obtain a loan modification on their home in order to purchase a bigger home together.  They were facing 3 years in prison. He was forced to resign and she accepted a plea and they are both on probation.  .. Full story HERE

 

And this…..have you seen America’s most wanted …..how’s this one look for your HEADSHOT?

 

Yes there are more sophisticated fraud schemes, but the next time you think that things just don’t seem right, it’s your job to LOOK deeper and find the red flags…becaue IT’S YOUR JOB TO KNOW.

So I say, LOSE a DEAL and SAVE your FREEDOM!

I will be keeping my realtors up to date with future arrests only to EDUCATE and PROTECT them with their careers, and both of our FREEDOM.

Just remember, no matter how bad you need the money…..it’s not worth losing your freedom, your license, career, family, reputation and going to jail.  Think twice…..and save  your career hence your life!

 

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I can pick my own interest rate?

Posted on August 31, 2011 by admin

I can pick my own interest rate?

How come other lenders haven’t told me that I can pick my own rate?

Before I get into the rates and fees, make sure you check to see that the loan professional you are working with is actually LICENSED with the NMLS which I explain why here and you can check by clicking here

Ok here’s the skinny on how interest rates work:

Interest rates can change daily and even hourly and are priced based on several things called RISK factors.  Remember, the bank/ investor makes their decisions and pricing based on the likeliness of getting paid back.

  1. Loan Amount
  2. Loan to value (sale price divided by Loan Amount)
  3. Credit Score (middle of all three)
  4. Purchase or Refinance (cash out or not for refinance)
  5. State and County of home (collateral)
  6. Qualifying Ratios (Debt to income ratios)
  7. Condo,Single Family, Duplex or Multi Family
  8. Length of time for lock period (25, 30, 45 days – longer time needed, the higher the price)
  9. Owner Occupied or Investment property

Now, once all this information is provided, we PRICE IT OUT and get our quotes.  (Banks only have ONE option, while mortgage Bankers have Many banks and investors to pull quotes from – therefore getting you the best possible rate at that time)

This is where it gets tricky.  We get a spread of rates to choose from.  I call this above, at or below the line.

Each rate offered either pays back money (points) above the line, or costs money to get - below the line

(Rates below are just an example to make it easy to understand and is not a current rate quote)


If the rate is PAR, this means the company must charge you the company minimum (otherwise they would be doing the loan for free, which wouldn’t be worth your business) Most likely, no less than 1 point.  (Average could be about 1.5%)

If the rate you choose is giving Back money, then you must use it towards  your closing costs.  If the bank/seller is paying your closing costs, then  you would need to choose one of the other rate options.  Some loan officers won’t even give you an option only because they know how the loan should be structured the best for you but won’t take the time to explain it to you.

The other thing to look at when comparing rates, are the FEES. There are NORMAL operating fees and what some people call JUNK fees.  I honestly haven’t seen many junk fees lately due to regulations, but these are the most common operating fees:

  1. Processing Fee
  2. Underwriting Fee
  3. Document prep Fee
  4. Application Fees
  5. Credit Report Fee
  6. Tax Service Fee

Be sure to see what the Mortgage company fees are and break them out of the ENTIRE list of fees.  We are required to estimate all third party fees when doing our estimate, so it can get a little confusing as to which fees belong to which party.

Be sure to compare rates on the same day and preferably at the same time if the market is moving quickly in either direction.

Some banks or credit unions will only change their rates once a week which might not give you the best rate if the market has since moved in a favorable direction.

So to recap, the questions you should be asking when comparing company’s once they have your details.

  1. Is the loan officer personally Licensed with the NMLS
  2. What are the rate options with and without points
  3. What are the mortgage company specific fees
  4. How long is the rate good for (if the rate expires before you close, you may incur an extension fee)

So don’t always ASSUME that the rate on your approval letter is the rate you are getting.  I personally qualify my clients at the Highest rate with the highest fees to leave room for the market to move, so that you don’t find a home and not qualify because the rates have moved during your search.

As always, make sure you are working with a professional that you can TRUST to be there with you throughout the entire process.

Happy  Hunting!

Serving all of Sunny California!

Colleen Craig

(661) 310-8536

 

 

 

 

 

 

 

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$4,000 Grant for First- Time Homebuyers who buy within the San Fernando and Santa Clarita Valleys!

Posted on June 23, 2011 by admin

$4,000 Grant for First- Time Homebuyers who buy within the San Fernando and Santa Clarita Valleys!  

The Southland Regional Association of Realtors is currently offering grants to qualified first-time home buyers who purchase an REO/foreclosure or short-sale property, or an approved NSP2 rehabbed home from the Los Angeles Neighborhood Housing Services (LANHS) and have low to moderate income-level.

The grant will be $4,000 and paid to applicants after the close of escrow.  Repayment is not required.

VIP! There are a limited number of grants, and they will be awarded to qualified applicants based on availability of funds and according to individual applicant need, as determined by the reviewing committee.  No one is guaranteed the grant just by submitting an application.

Qualifications:

  • Applicant must be a first-time homebuyer, as defined by the State of California
  • Applicant must use a REALTOR member of the SRAR in the purchase of their home through the close of escrow.
  • Applicant must purchase an REO/Foreclosure or Short-sale property, or an approved NSP2 rehabbed home from the Los Angeles Neighborhood Housing Services.
  • The home to be purchased must be within the jurisdiction of SRAR
  • The applicant must not exceed the following income limitations:
  • 1-2 Household members = $95,1603
  • 3 or more household members = $111,000
  • Applicant must attend the Los Angeles Neighborhood Housing Services First-Time Homebuyer seminar and must prove the successful completion of the seminar with the certificate provided by LANHS

 

It may take 30 days or longer to receive the funds.

Call Colleen with any questions

The Socal Mtg Pro!  (661) 310-8536

 

 

 

 

 

 

 

 

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There is a fire sale on real estate!

Posted on February 20, 2011 by admin

There is a fire sale on real estate!

Bloomingdales is having a sale!  90% off everything in the store!  But I think I’m going to wait?

Wait….for what?

I think they might have a 95% off sale……okay…you wait for that, I’ll be back!

==

Now if that were true of Bloomingdales or ANY store, would you wait?

I just had this conversation with my client that I’ve been working with for over a year.  They were in escrow but canceled the escrow because of termite repairs.  I followed up with them a little while after they canceled the escrow and this is what they told me.  We think we are going to wait because we think things will go lower.

Alrighty then.

Now my next call was from a client who is a real estate investor that lives in Beverly Hills.  We were working out how he could finance the 9th property he was about to buy this year.   He was like a kid in a candy store.

real estate investors

I wished I could have let the first client listen to the conversation with the second client.

So how do we educate people without sounding like we are just self serving sales people trying to make a buck?

The FACTS ….the facts……and nothing but the facts……

real estate facts1.      My burberry rain boots were normally 226.00 and now they are 22.50! (not true But if it were,) Good deal? DUH!

2.       Rates haven’t been this low for anyone in this lifetime.  Good deal?  DUH     (This is FACT!)

There is a FIRE SALE on real estate……….DUH!  (THIS IS FACT)

Santa Clarita Real Estate FIRE sales………

Now I ask again……there is a fire sale on real estate….interest rates are at their lowest……..are you still going to wait?

If so…..good luck and I’m sorry you couldn’t make it to the party!

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Is your Loan officer a Big talker but couldn’t pass the mortgage exams?

Posted on February 1, 2011 by admin

Is your  loan officer a big talker but couldn’t pass the mortgage exams!

Lawyers pass the BAR exams in order to practice law.   

CPA’s, Accountants and tax attorney’s all pass different tests in order to obtain their designations.

Doctors , Surgeons and dentists pass a multitude of exams in order to practice medicine.

And NOW loan officers must pass extensive exams in order to originate loans!

IS YOUR LOAN OFFICER LICENSED OR JUST REGISTERED?

What is the Difference?

There’s a lot of alphabet soup out there when it comes to registration and licensing.  DRE, DOC, NMLS etc.  What does it all mean? If a loan officer has their real estate license, does that mean they are LICENSED?  Nope! Not under the NMLS !

Effective July 1, 2010 all Mortgage Bankers and Mortgage Brokers Across the country will require their loan originators to be licensed through the NMLS (Nationwide Mortgage Licensing System)

However! Based on an exemption in the laws, the big Interstate Chartered Banks do not require their loan originator working for a big bank such as Chase, Wells Fargo and Bank of America to be licensed. Currently they only require them to be REGISTERED with the registry.

The S.A.F.E. Act states:  The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the S.A.F.E. Act) requires the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Farm Credit Administration (collectively, the Agencies) to jointly develop and maintain a Federal registration system for individual employees of Agency-regulated institutions who engage in the business of residential mortgage loan origination. The statute requires these individual mortgage loan originators to be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established previously by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States.

Is your loan officer licensed?  You can find out here:

http://www.nmlsconsumeraccess.org/

In order to get LICENSED, loan officers (not working for a Chartered Bank)  must go through extensive testing, background and credit report checks etc.

Here is a chart to show the differences between what is involved in getting licensed. Please note, that some Chartered banks require internal background or credit checks as they would ALL employees.  This only applies to the NMLS requirements for loan officers.

SAFE ACT CA LO’s Chartered Bank LO’s
Licensed Yes No
FBI Background Yes No
Fingerprinted Yes No
Assurity Bonded Yes No
20 hours upfront education Yes No
8 hours continuing education Yes No
Credit checked Yes No
Fed and state testing Yes No
Complaint mechanism Yes No
Licensing  fees and renewals Yes No

.I’ve come across many loan officers that talk a big game.  They bad mouth other loan officers, they rip their articles apart, they make it sound as though they are the only game in town.  Yet, I’ve recently looked up these bully’s only to find that they were unlicensed and unable to pass the National and state exams.

If you fail, you must wait 30 days to test again, if you fail a second time, you must wait another 30 days, and a third time?  You guessed it, you must wait another 30 days.  If you fail the 4th time, you must wait to retest and  are unable to originate loans for 6 months!

I’ve heard of loan officers that have failed and are somehow still originating loans!  How Is this possible?  Well it all comes down to enforcement.  These loan officers are most likely putting the loan applications in another loan officers name (someone who is licensed) and they are probably working out a commission deal illegally under the table.

So if you have applied for a loan, and the last page of the application is not signed, or is signed by a name you have never heard of?   Most likely that loan officer you applied with is not licenced and was unable to pass the tests or background checks.

DO you want to know of your loan officer is licensed?

So, the next time you speak with a loan officer that is talking a big game.

Check to see if they have their NMLS license and make your own decision!

NMLS# 254430

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What is a Supplemental tax bill?

Posted on January 26, 2011 by admin

What is a Supplemental tax bill from the Los Angeles Tax Assessor’s office?

In Los Angeles county taxes are paid on a fiscal year starting from July to June of the following  year.

Taxes are assessed on the values as of January 1st of every year.

So when you purchase a home, although your taxes will be calculated based on a certain percentage of the sale price (currently 1.25%) the new bills won’t be adjusted until your property is reassessed.  Reassessments are only done when the tax office receives the transfer information  after closing.  It could take several months for this to take place.

If your seller was paying taxes on a lower assessed amount, you will be getting a separate supplemental bill for the difference between what you owe for the higher amount from the day you closed until the date the new tax bill is generated with the new assessed amount.

You may get two supplemental tax bills depending on when you purchased your home.  For example, If you close on your home in March and the fiscal year is from July to June, you will owe taxes for the bill from March to June of the year you closed and then possibly from July to June of the following year if the reassessment wasn’t done until after the second bill was generated.

What if your taxes are included in your mortgage payment through an impound account?

This is where things get a little tricky.  If your mortgage company has an impound account calculated on the higher amount (which they should), then yes, they should have extra in the account.   However, Supplemental tax bills do not go to the mortgage companies, only to the owners.  Mortgage companies are only allowed to keep a certain amount in excess in the impound account for a certain period of time.  So you may get a refund for the extra amount before you even get the supplemental tax bill and not know what it is for.  Sometimes the mortgage company will adjust your payment DOWN when they get the tax bill before it’s assessed and then there wouldn’t be any extra in the account.  Then when they reanalyze your account on the yearly anniversary, they would have to adjust your payment back up to meet the correct amount to cover the taxes and insurance.

So if you get a notice from your mortgage company that your payment is lower than what your lender estimated, don’t get too excited!  And if you get a refund check, don’t run out shopping!  You will have to pay the bill when it comes in.  But the good news is, it’s only the first year when you purchase a home that you will get the supplemental tax bill.

Now if you purchased a home for LESS than what the house was assessed for which would make the tax amount the seller was paying higher than what you will owe, the opposite would be true, and you would get a refund! Now you can resume shopping.

What if your value decreased after you purchased your home?  You may qualify for an automatic reassessment, or you can request a Decline-in-Value review.  Claim forms are available online and can be filed between June 1 and November 30.   You can find out how to go about the process at http://lacountypropertytax.com or www.assessor.lacounty.gov

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No Cost Loan Myths

Posted on January 7, 2011 by admin

No Cost Loan Myths

I recently had a client mention that they saw an advertisement from one of the big well known banks about a no cost refinance.  How does this work?  Why would some companies charge fees to purchase or refinance and others do not?

Well it’s quite simple.  They ARE charging you, but you may not realize it.

To obtain a loan for the purchase of a home or to refinance your current loan there are costs involved to all the parties doing the work.  It costs everyone money….. Period.    There are fees for processing, underwriting, appraisals, title, recording etc. (for a complete breakdown, contact a trusted advisor)

Whether or not you realize you are paying for these fees is the question.  Do you really think any company would just give you a product or loan for free when it costs them money to do it?

That is what they advertise, and I’m going to explain how it’s done.

There are two ways for the bank/mortgage company to do this.  See examples below based on a 400,000 loan with $3500 in fees.  (Fees are estimates only, without an impound account and will vary depending on your particular scenario)

1.        Normal 400,000 loan,  with you paying the costs out of pocket

2.       Same loan, adding the costs to the loan amount.

3.       Same loan, keeping the loan amount the same (making you think it’s free) but adding the costs to the interest rate.

So which is the best way to go?  Well it depends on your situation.  If you don’t have the funds to pay the costs up front to keep your payments the lowest, then I would recommend the second option.  We would then add the costs to the new loan amount.  The third option, which is what most banks will advertise as a no cost loan (Keeping your loan amount the same) is the most costly loan because the interest is higher.

See below the difference in interest you would pay over the 30 year term.  The overall cost from paying the costs out of pocket isn’t much different than adding it to your loan amount although the payments are slightly higher.  But adding it to the interest is the highest overall cost. Although you are borrowing the same loan amount, the interest in the long run is much more over the long term.

So in conclusion, is it really a no cost refinance?  I think NOT!

So that old saying of……If it seems too good to be true?…….you know the rest……

This is why it’s imperative to deal with a professional mortgage consultant like the mortgage myth busters who will give you a written a loan analysis of your situation so that you can make an educated decision and know exactly what you are getting before you proceed.

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FHA Streamline 203k loan is a perfect program for foreclosure properties with minimal repairs

Posted on January 3, 2011 by admin

The streamline 203k is a perfect program for REO properties with minimal repairs.

Did you know you can tell the bank that they will not be responsible for the repairs?  WOW!  The bottom line not to mention the headaches,  just looked a lot better!   And that FHA buyer that didn’t look so great, just went from mediocre to a GREAT offer!

The FHA 203k Loan allows for the client to finance the cost of repairs needed on a property into their mortgage.  The repairs are done after closing so this is an advantage to the seller or bank that owns the property because they aren’t responsible for the repairs.  This is a great negotiating tool for your client who may be up against other offers which would require the seller/bank to do the repairs!  Are there any foreclosed properties out there in need of repair?  I think so! This is perfect for those REO properties that have missing appliances or plumbing and electrical repairs needed!

STREAMLINE 203k for dummies

The Streamline 203k is for limited repairs requiring little expertise to manage therefore there is no consultant required (Although it depends on the extent of the repairs, I may recommend you get one anyway - It’s worth the cost!).  It is designed for a “streamlined” project where the home can be occupied immediately after closing, and the contractor will receive a single payment at completion. (Maximum of 3 contractors) The maximum amount that can be financed on top of the sale price for the streamline is $35,000 (which includes some fees/reserve/costs) so assume about 30,000 in actual repairs.

Below are the Eligible and Ineligible repairs for the Streamline K

ELIGIBLE:

  1. Repair/replacement of roof, gutters and downspouts
  2. Repair/replacement/upgrade of existing HVAC systems
  3. Repair/replacement/upgrade of plumbing and electrical
  4. Repair/replacement of existing floors
  5. Minor remodeling, such as in the kitchen, which does not involve structural repairs
  6. Exterior and interior painting – including lead-based pain stabilization.
  7. Weatherization:  including storm windows and doors, insulation,, weather stripping, etc.
  8. repair/replacement/upgrade of appliances (may include free-standing ranges, refrigerators, washer/dryers,  and microwaves)
  9. Improvements for accessibility for persons with disabilities
  10. Repair/Replace/add decks,patios and porches
  11. Basement finishing/remodeling/waterproofing (not requiring structural repairs)
  12. Window & Door replacements and exterior wall re-siding.
  13. Septic and/or well repair or replacement

INELIGIBLE:

  1. Major rehabilitation or major remodeling, such as relocation of a load-bearing wall.
  2. New construction, including room addition.
  3. Repairs of structural damage.
  4. Repairs requiring detailed drawings or architectural exhibits
  5. Any rehabilitation activities that require more than two payments per specialized contractor
  6. Landscaping or similar site amenity improvements
  7. Any repair or improvement requiring a work schedule longer than six months
  8. Work items that would necessitate a consultant to develop a work write-up
  9. Work that would cause the borrower to be displaced from the property for more than 30 days during the time of rehabilitation
  10. All items ineligible for the Full Consultant 203k

This works the same way as the Full Consultant 203k program but can be done in less time.  We recommend at least 90 days for the Consultant K program and 45 for the streamline.

The banks want to unload their inventory as quick as possible and with the least amount of costs.  Educate your clients which INCLUDES the bank about this program and close more deals.  This is also a great way to negotiate a short sale if you have a qualified 203k buyer.  But just remember -give it the time it needs and set the expectations up front.   This is why having a certified FHA 203k Lender with experience with this program is crucial.

This program can also be combined with the Energy Efficient mortgage for those clients that are GOING GREEN!

There are so many options and I would be thrilled to help you find  the right program that most people don’t even know exist!

Happy Rehabbing!

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Assets to close, gift, FHA closing costs, Valencia Mortgage, FHA mortgage, FHA mortgage Valencia

Posted on January 3, 2011 by admin

Show me your assets!  Yep that’s what I said.

I’m talking about your assets to close!

If you or anyone you know is planning on buying a home, you need to read this.

In addition to a credit check, verifying your income and inspecting the property, your mortgage company will be verifying your money.

Stated income and stated asset loans have pretty much fallen off the face of the earth, and investors have gotten stricter when it comes to verifying your assets.

Now what is going to be verified?   Since things have gotten very challenging, it’s best to assume that they will verify anything and everything regarding checking, savings and retirement accounts for the previous 2 months.  We will need to show exactly where all the money is coming from for the down payment and closing costs.  Any large deposits must be documented.    In the past, some investors would consider anything over 1,000 as large.  Now it’s anything over and above your normal payroll/income deposits.  We will request the last two months bank statements when you apply and you will need to keep us updated throughout the process as you receive more statements.

If you are applying for an FHA loan, you are allowed to get a gift from a family member for the down payment and/or closing costs.  However, it must be fully documented with a gift letter, and proof of transfer from the donors account to your account.  The most recent change is that FHA is requiring us to document any large deposits that may be in the DONORS account prior to the transfer of the gift.  So you can no longer give cash to your brother and have him gift it back to you because there is an obvious cash deposit right before the transfer. If you do have cash or “mattress money” and don’t plan on purchasing for more than 3 months or more, deposit it into your account as soon as possible so that it’s been there for at least 90 days before you need to apply for the loan.

If you are applying for a conventional loan, you will need to document that 5% of the sale price is from YOUR OWN funds which is being used for the down payment.  You must also show where the money is coming from for the closing costs (which can be a gift) PLUS two months reserves.  Reserves are to show that you have at least two months mortgage payments in the bank after you purchase the home.  Again, any large deposits must be fully documented.

If you are applying for a VA loan, there is no down payment required, but the closing costs must be documented and can be a gift or paid for by the seller.

In the past, as long as we DOCUMENTED that you had the funds, you could just show up with the money from anywhere else and it wasn’t questioned.  Now, we need to show the actual withdrawal from the exact same accounts that we verified when you go to closing.  For example, if we verified 10,000 in your savings and 2,000 in your checking and you wired 12,000 from your savings because you made a transfer in order to wire for closing?  You will need to show the transfer from checking to savings before the loan can fund.

Sellers contributions towards closing costs can be used, but vary from loan to loan.  Check with your loan officer at the time of pre-qualification.

So although it may sound daunting, as long as you are educated up front and have all your money in place, it won’t be so difficult down the road.    The best thing to do is get it in a savings account and keep it there!  Don’t be transferring money back and forth and driving your mortgage company nuts trying to figure it all out like some psychopuzzle.

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