You may not borrow elsewhere for the down payment (secondary financing) on most loans. You will be asked to prove that you already have enough on hand for a down payment and closing costs. Many institutions are skeptical about claims that your money is under the mattress, and will credit you with only a limited amount in cash—as little as $200, perhaps. They will also want an explanation for large sums of money that have suddenly turned up in your savings accounts within the past few months. (Maybe, they figure, you borrowed it somewhere, thus taking on too much debt.) Bring in all details on your assets: numbers and balances on savings accounts (the lender will check with the bank to verify), list of stocks and bonds owned, income tax return if you anticipate a refund. Your earnest money deposit counts as an asset; the lender will verify it with the person holding it. You may have assets you’ve forgotten about: cash surrender value on your life insurance policy, valuable collections, jewelry, boats and RVs, IRA accounts, other real estate owned. If your loan agent says you are a borderline qualifier, ask if you should list your free-and-clear furniture, appliances, and automobiles. A gift letter from a relative, promising to furnish some of the funds you need for closing with no repayment required or anticipated, can sometimes be used at mortgage application. Many lenders require the letter on their own form, and most want to verify that the relative does indeed have the funds in question. |
