Down-Payment Flubs That Delay Transactions

October 5, 2016

Your buyers finally saved up enough for a down payment on a home. Now make sure an innocent mistake with that big chunk of change doesn't delay their purchase. Warn them against doing these things:

  • Making a large deposit at the last minute. Lenders collect two months' worth of bank statements before approving a borrower for a mortgage, and a big deposit in the 11th hour could give them the impression your buyer's financial stability isn't consistent. Tell your clients to keep large deposits outside the lender's 60-day window.
  • Keeping money in someone else’s account. "The lender wants to make sure the buyer is the one coming up with the down payment funds," says Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage. So your client's payment shouldn't be coming from mom and dad's account or anyone else's. If the buyer has a joint account with someone, that's OK — as long as the names of both account holders are on the mortgage. Otherwise, have your buyers switch the money to an account in their name at least two months before they apply for a loan.
  • Consolidating funds in the final hour. If your buyer's savings are in different checking accounts, don't let them consolidate the funds into one account at the last minute. They will create "a paper trail nightmare for the lender," Fleming says. To avoid delays, they should consolidate a month or two before they apply for a loan.

Source: “Stop! 5 Things You Should Never Do With Your Down Payment,” realtor.com® (Oct. 5, 2016)