When purchasing a property, part of the purchase process typically involves earnest money deposits from buyers to demonstrate that they are acting in good faith. These deposits must be submitted in a certain manner in order not to delay the mortgage approval process. This blog provides information on earnest money deposits for MA property transactions.
Location of Funds
It is important for buyers to use their own money for earnest money deposits. Many loans specifically require buyers to use personal funds for all expenses related to the real estate purchase. Buyers are usually asked to provide copies of account statements showing that the money was pre-existing in their bank account and that earnest money deposits were taken from that account. Account statements should also show sufficient funds for for what must be brought to closing. Lenders will verify all of this before approving a mortgage. Buyers failing to use their own funds can impact their loan approval.
Gifted Money
Some types of loans allow gifted funds to buyers from their family members. Even so, home buyers should not ask family members to submit earnest money deposits on their behalf. The proper process includes a gift letter, copies of bank statements from the family member verifying where the funds came from, and then bank statements from the home buyer displaying receipt of the gift. Keeping with this process will minimize delays when underwriters process the paperwork.
Getting Ready for Earnest Money Deposits For MA Property Transactions
Buyers preparing for a future property purchase should take a few precautions to prevent delays with their financing approval. First, they should make sure all money required for earnest money deposits, down payments, and closing costs are in their own accounts and may be documented. Have at least two months of bank statements on-hand. The statements should not include any strange behavior (such as deposits from undocumented sources). Finally, when submitting earnest money deposits for MA property transactions, buyers should utilize money from their own accounts. If expecting money as a gift, ask your loan advisor for the required procedure before accepting the gift. These steps will reduce issues and lead to easier mortgage approval. For more guidance on home financing, contact Christopher Graves at Emery Federal Credit Union via phone at 781-759-1200 x22 or email christopher.d.graves@gmail.com.
