The real estate process normally involves earnest money deposits from buyers to demonstrate that they are proceeding in good faith. Deposits should be handled in a certain manner so as not to interfere with the mortgage approval process. This article includes information on earnest money deposits for PA home transactions.
Location of Funds
It is critical for buyers to use personal money for earnest money deposits. Many mortgages specifically mandate that buyers utilize personal funds for all expenses related to the property purchase. Buyers are typically asked to furnish copies of bank statements showing that the money was pre-existing in their bank account and that earnest money deposits were withdrawn from that account. Accounts should also show enough funds for for what is due at closing. Lenders will confirm all of this prior to approving the financing. Buyers not using their own funds can impact their likelihood of obtaining a home loan.
Some financing programs allow gifts to home buyers from their family members. Even so, home buyers should not have family members submit earnest money deposits on their behalf. The proper process includes a gift letter, copies of account statements from the family member showing where the money came from, and then account statements from the buyer displaying receipt of the money. Staying with proper steps can lead to fewer issues when underwriters process the paperwork.
Preparing for Earnest Money Deposits For PA Home Transactions
Buyers preparing for an upcoming property purchase can take a few steps to reduce delays with their mortgage approval. First, they can make sure all money required for earnest money deposits, down payments, and closing costs reside in their own accounts and may be documented. Have at least two months of account statements on-hand. The statements should not display any odd transactions (such as large cash deposits). Lastly, when giving earnest money deposits for PA home transactions, buyers should use funds from their own accounts. If accepting money as a gift, ask your financing consultant for the necessary steps prior to receiving those funds. These steps may reduce problems and result in easier loan approval.