Gone are the times in buying a home where you have to have a large sum of money saved up in order to purchase a home. Now, depending on your financing, the minimum down payment for a new home may be lower than you think. Combined with the current interest rates that are at record lows, many are finding it more affordable than they thought to purchase a new home! Parry Custom Homes, a premier Pittsburgh on your lot builder, shares how to best handle the down payment of your new home with the different options you will have.
It is important to consider where to store your funds for the down payment on a new home. Whether you have it in savings already or if it will be a gift from a family member, it’s good to have a plan in place on where this money will be housed. These three tips will help you with this decision and also avoid delays in securing your new home loan.
Tip number one: Do not house your deposit in your checking account
The first and one of the most important tips is to not put all your home deposit money in your checking account. Believe it or not, checking accounts can be a problem in home buying. If you keep your home loan money in your checking account where you pay your bills, it can look to a lender like you are spending your home loan money on your bills and everyday spending, which is not a good thing.
Instead, keep your money in a separate account or savings account that you are not taking money out of. It’s best to keep it in a separate savings account that has little to no activity.
Tip number two: Keeping it in another person’s account
If you are storing money in your parent’s bank account, even though it may be your money you will have to have them sign a “gift letter” stating that the money is donated, so your mortgage company knows it’s not another loan.
Even though the money is not technically a gift since it is money you own, your lender wont view the money in that way. Any account that is on paper that is yours, is considered your money. Any account that contains funds under another person’s name, is considered their money.
If you are in fact getting a gift of money from a family member, they will need to provide the gift letter as well as bank statements that show they have the funds to give the money to you as well.
Tip number three: Storing money in your safe
Hiding your money at home and away from the eyes and the ears of a bank doesn’t help you either. All financial institutions have strong anti-money laundering laws to prevent any criminal activity. The money you use to buy a home must be in your bank account for at least 60 days or the money has to be gifted, as mentioned above.
Cash deposits from any side jobs will be sure to create questions and conditions from your mortgage lender. It is best to do yourself a favor and when you are serious about buying a home, use your bank account to store all your funding.
Following the three tips above will not only make sure you are following the right steps when buying a home, but also prevent you from any time sensitive issues that could prevent you from buying the home or getting the loan you need, when you need it.
Parry Custom Homes is an established homebuilder in the Pittsburgh area. Call or contact us today for more information.