Prepare Now for Your Mortgage App!

Having your bank account statements in order and avoiding the deposit traps will help to assure a smooth mortgage application and approval process.

• Always provide ALL numbered pages of each account statement. “Page 1 of 8” may be nothing more than a cover sheet. Unfortunately, underwriters don’t know that unless they see it.

• Document the source and purpose of deposits not clearly identifiable as being from your employer.

• Make copies of all checks and deposit slips and keep them together in case they’re requested.

• Track transfers, too. We’ll need statements for both accounts involved. If it is a gift from a family member, please consult with us for the proper process to follow.

• Don’t deposit currency and checks together, as this will be hard to document. It’s best not to make cash deposits unless you can clearly document the source of the funds.

Following these steps will make it easy to prove that funds going into your accounts are not borrowed. Even private loans have corresponding payments, so underwriters have to be certain to account for all debts.

 

When in doubt, remember we’re here to answer your questions.

Can You Use “Mattress Money” to Close Your Loan?

With vigilant focus on the source of funds for closing mortgage loans, it’s important to know what’s acceptable. Here’s what you need to know and what you’ll need to provide:

 

 

  • Mattress Money or any “cash on hand” is not acceptable. All funds must be “seasoned,” which means your money needs to be in an institutional account (bank, credit union, brokerage, etc.). You will need to provide all pages of up to three months of consecutive statements for proof these funds are yours.
  • Gift Funds are OK with a signed “gift letter” (a form we provide) and evidence of the donor’s ability (a statement showing sufficient funds). Later, we’ll need copies of the check, deposit slip and account statement to show the transfer into your account.
  • Assets Being Sold, such as a car, boat, collectible or anything of value you are selling, require proof of ownership (such as a registration or title) and evidence of value (blue book value or appraisal). After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds to your account.
  • Other Examples include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings. Be prepared to show the source of funds, evidence of transfer into your account and any supporting documentation of value, terms, service provided, etc.

Never hesitate to ask questions when you’re unsure about what will work and what will not.

Are You Dreaming of a Second Home?


Have you always dreamed of owning a vacation home? There may never be a better time than now.

Purchasing a second home is not a decision to be taken lightly. But if it is something you’ve always wanted, the means for making that dream come true are not as difficult as you might think.

Conventional Financing – Purchasing and financing a second home is little different than purchasing a primary home. Some of the low down payment programs are not available, but with conforming loans, as little as 10% down can get you started.

“Cash Out” Financing – Are you thinking about a cabin in the woods, a summer cottage, ski or golf course condos? Unique properties may have appeal, yet they may also need non-conventional financing. If you can, using equity from a primary home via refinancing can be a smart solution that also provides you with “cash buyer” status.

Rental Income – You should never purchase a vacation home if you’re dependent on rentals to make it work. However, if you will hire a manager and don’t mind sharing, the income can be a great subsidy.

Tax Benefits and Appreciation – You should always check with your tax pro, but owning a second home can still carry tax advantages that serve to reduce the actual cost of owning. Appreciation is never guaranteed, yet over time, value increases can reward you handsomely for decisions made today.

If you think you are cut out for second-home ownership and are ready to find out more, call us. We’ll be happy to help identify the best way we can help you reach your goals today.

5 Smart Things to Do With Your Refi Savings!

Before you get acclimated to a lower monthly payment, why not leverage your savings by making another wise decision? Below are a few options for putting your new-found extra cash to good use.

1. Establish or enhance your emergency cash reserve. If your income is interrupted or if an opportunity or need arises, your emergency fund lets you avoid interest costs from borrowing or tax consequences from cashing out investments.

2. Pay down non-tax deductible/high rate debt. Paying off high rate credit cards or other debts will free up your cash flow so you can invest it for growth.

3. Invest, Invest, Invest. Max out your 401K contribution. Even a partial match from your employer yields an amazing, instant rate of return. Got kids? Start or ramp up a college savings plan. Tuition costs are rising faster than inflation. Invest now to help beat the trend.

4. Make sure you are protected. Do you have sufficient life, disability and property insurance? Doing everything else right matters little if tragedy strikes and you lose it all due to lack of coverage. Why not set up a review with your insurance pro today? Call me if you need a referral to someone who can help.

5. Pay off your loan faster. This is not always the best thing to do with your cash (see numbers 1, 2, 3 and 4), but for some, peace of mind has the best rate of return.

One more thing, too. How about buying your vacation/retirement home today? Subsidize your payments by renting it out when you aren’t there. Then, when you do retire, you will have already built memories in your new home, and you will be well on your way to paying it off. Plus, when you sell your main residence later, the proceeds can fund living expenses. This is not for everyone, but at today’s low rates, it may make sense for some.

Never hesitate to reach out with your questions. As always, your referrals are greatly appreciated!

Tips on Controlling Debt

I’m writing to pass along a few useful tips on controlling debt. Simply put, your debt limits what you can do with your money. Plus, interest payments and fees can drain your resources.

To manage your debt more efficiently, make a plan to pay off non-tax deductible and high interest loans as quickly as possible.

In particular, watch out for:

•    Credit Cards:  If you use your credit cards as a loan, you could be paying very high interest rates. This quickly becomes a financial burden. If you only make the minimum monthly payment required, you eventually end up owing much more. Try to pay off the credit cards with the highest interest rates first. And, don’t be afraid to call your credit card company and simply ask for a lower rate!

•    Interest-Free Loans:  These loans look tempting when you don’t have cash to spare. But, they can turn around and bite you after the “interest-free” period expires. You may have to pay interest backdated to the day you purchased. Check the terms and conditions on these types of offers very carefully.

I look forward to hearing from you if you have any questions on this topic, or if there is anything else I can assist you with!