When purchasing a home, there are many rules and requirements a borrower must follow. Previously, we touched on the source of funds and laws that are designed to prohibit money laundering.
Let’s expand on how lenders verify the funds in bank accounts and investment accounts. When funds to close a home loan are required, mortgage lenders must verify those funds and where these funds are coming from.
The first and easiest way is to verify bank statements. Lenders will always ask for the two recent months of bank statements so they can be certain the money is in the bank. They will check for cash deposits and large deposits; our previous blog covered the problems those can create.
Lenders will also want to check 401K, IRA and stock accounts if borrowers are liquidating funds. When a borrower wires or brings a cashier’s check to closing, those funds MUST come from a source the lender has verified.
An example would be if a borrower verified an account at Bank of America but brings a check from a different account at Wells Fargo, this will not fly. The money must come from a verified source.
Also please be sure to not spend the money that was verified before you get to closing. We have had borrowers who had the money in their account at the beginning of the purchase process, but by the time we got to closing, they spent that money and couldn’t close on the home. Sounds crazy but it’s true.
If we can help with any questions on your New Mexico mortgage, call Indigo Mortgage, serving Albuquerque and all of the state since 2003.