How to Avoid delays in your closing on a Home Loan, The Series Series Two: Assets

Earlier in Series, On of How to Avoid delays in your closing on a Home Loan, we mentioned just how important your credit is for when you’re applying for a home loan. Aside from your FICO score, your assets are a huge part to your loan approval. You must prove that you have the funds to close and all funds must be sourced prior to issuing out a loan approval.

 For Residential home loans you need 2 months of recent bank statements and for Commercial loans we would need 3 months of recent bank statements.

For Example… If you apply in the month of October 2014 NuHome would need August 2014 - September 2014 bank statements for a Residential Home Loan. Now, if you’re getting a Commercial Loan then you would need the bank statements for July 2014 – September 2014.

Once we have received your bank statements we will look through them thoroughly. Please be aware that any cash deposits over $100.00 MUST be sourced.

Gifted Funds                                                                           

A “gift” is allowed only when it is given by an immediate family member.  It must be considered a gift and NOT a loan which will be requested to be paid back. If you received a gift from a family member you must have a gift letter stating: who gave you the gift, when it came to your account, and the donor must be willing to provide their bank statement. The Donors bank statement will prove that the donor is in a good financial position to gift you those funds. This is what we call the “Gift Test”. You may scratch your head and say... ”Hmm. well why is their bank statement relevant?”

The Gift Test

Here’s why… Let’s say Uncle Sam gives you a gift of $7,000.00 for closing cost but he only has $7,300 in his account. There is no way he is any position to give you that gift. Based on the ability to give a “Gift Test”, which is listed below, would fail because this bank statement shows that he would be left with no money for himself.

Bank of America

10/01/14 Cash Deposit	$700.00
10/05/14 Company Check Deposit	$3,000.00
10/15/14 Company Check Deposit	$4,000.00
10/16/14 Company Check Bonus Check	$300.00
10/17/14 Cash Withdrawal	$7,000.00

                        Current Balance                                                            $300.00

Now let’s talk about Cash Deposits… If you or your donor has bank statements that have cash deposits of $100.00 or more they must be sourced. If any cash deposits over $100.00 cannot be sourced that amount will be backed out of total funds to close. Cash deposits may be sourced by invoices or other donor’s gift letter.

For instance... If Uncle Sam provides us with a bank statement, like the one that is listed below, and says that a family member gave him that cash to deposit on October 1, 2014, then we would need a gift letter from that family member along with a Gift Test. Everything must add up and must be sourced.

Bank of America

10/01/14 Cash Deposit	$700.00
10/05/14 Company Check Deposit	$3,000.00
10/15/14 Company Check Deposit	$4,000.00
10/16/14 Company Check Bonus Check	$300.00
10/17/14 Cash Withdrawal	$7,000.00

                        Current Balance                                                            $300.00

            After we have received all gift letters and source all cash, we will be able to issue your loan approval. This final bank statement will need to be an original copy or print out and signed copy from a bank representative. By us addressing these issues ahead of time, we will make the loan process a lot faster once it goes to underwriting. Keep in mind that if we do not receive the assets and gift letters, then there will definitely be a delay in your loan process.

For more information on this subject please contact us by phone 713-373-0345. Frank Marta NMLS# 245813 | 835196