One thing that you should not do before trying to purchase a home is moving your money from place to place. When a lender is ready to review your loan papers for approval, one of the many things they may be concerned about is the source of funds that will be used towards your initial down payment and then later for closing costs. More than likely, you will need to provide statements for the last three or four months on your liquid assets. This may include savings accounts, checking accounts, certificates of deposit, money market funds, mutual funds, stock statements, and possibly even a copy of your retirement accounts and company 401K.
If you tossed your money back and forth between your accounts during that period of time, there may be several large withdraws and deposits that will show up in them.
The mortgage underwriter (which is the person who in the end either approves or denies your loan) will ask for a complete paper trail of all of your deposits and withdrawals over a certain period of time. You may also need to show verified copies of deposit receipts, cancelled checks, and any other data that may be questionable, which could become rather tedious.
You may overtime be exasperated towards your lender, but try to remember they have strict guidelines and are only trying to do their job properly. They must do what they can to eliminate potential fraud and to ensure quality control. With this being said in most cases its a necessity on most loans to completely document all fund sources. While you think it may be easier to consolidate all of your funds by moving them into one checking or savings account its possible that you are making things more difficult for the lender to properly document all of your sources of funding.
So if possible try not to move your money from one account to another and try keeping a single bank account. Opening new bank accounts isn't really a good idea while trying to become approved for a loan. Try keeping your money put where it is until after you have been approved for your loan.
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Gary Allalouf- RA
Hawaii Realty International
Hawaii Mortgage Basics