Let’s talk about funds needed to close and specifically with what is referred to as a “large” deposit. These are funds that have been deposited into your bank account as a single deposit or multiple deposits on the same day that are 50% or more than your gross monthly income. Your lender will need to “source” these funds and identify where they came from.
If they are funds that came from a family member they will be considered a “gift” and gift documentation will be required. If they came from the sale of something you will need a bill of sale and evidence of the value. Tax refunds, tuition reimbursement, retirement withdrawal or a retirement loan, sign-on bonus, employer paid relocation funds, existing home sale, or equity loan deposits are easily documented. It’s the funds that can’t be sourced that will present a challenge. Your lender is looking at funds that have not been “seasoned”, meaning they have been deposited in the last 60 and in some cases 90 days.
Your lender will be asking for complete bank statements for at least 60 days and if your earnest money deposit check clears your bank account after this period of time either new bank statements or activity statements will be needed – if there are any large deposits in the account at that time you will have to support where they came from.
Please plan ahead and determine where your funds needed to purchase the new home will be coming from and what they are going to be derived from – I promise this will save you a few headaches.