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Old 03-12-2013, 09:46 PM
 
171 posts, read 283,876 times
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My husband and I are getting ready to buy our first home and will be looking to get pre-approved with a lender soon. We received a large sum of money from my father-in-law about a month ago which we deposited into our checking account then immediately used to pay off some credit card debt. Our credit scores are excellent and we have no issues with our credit (payments always on time, no collections, etc.).

My question is how underwriting might look at the large deposit. What type of documentation would an underwriter require to explain the money? What info is required in a typical letter of explanation? Should we be concerned that this will raise a red flag on our application?

Thank you in advance for any info you can provide!
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Old 03-12-2013, 09:49 PM
 
Location: Austin
7,205 posts, read 18,162,027 times
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Yes, it will raise a red flag. You will probably be required to obtain a Gift Letter from your father showing the funds were gifted to you, and he has to show the funds were his to gift. If you can wait another month, the funds will have seasoned as they only ask for your last 2 months of statements.
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Old 03-14-2013, 11:18 PM
 
98 posts, read 634,156 times
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You will definitely need to complete an explanation. We are going through this right now. We weren't lucky enough to have money gifted but had 2 deposits from our insurance company for our roof claim we had to explain. We even had to send the copies of the damage estimates and roofing contract. We had another large deposit from our relocation company and had to write out an explanation letter and they required a letter from the Relo company. They said they need this for anything that is not payroll.

We have great credit, very little debt and are getting a mortgage well before our debt/ income ratios but it still seems like everyday there is some new thing I have to complete or dig up. I understand the need to regulate but a lot of it seems totally ridiculous and crazy. They want my husband's company to write a letter verifying that he is not being demoted to take the new job in the new location. He has worked there for 13 years and the relo is part of a promotion. Just be ready for lots of hoop jumping!
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Old 03-15-2013, 11:16 AM
 
Location: Kansas City North
4,402 posts, read 7,622,287 times
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And if you finally get approved and go to closing....you'll get writer's cramp signing all the government-mandated paperwork.
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Old 03-15-2013, 11:21 AM
 
4,015 posts, read 5,148,144 times
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Quote:
Originally Posted by FalconheadWest View Post
Yes, it will raise a red flag. You will probably be required to obtain a Gift Letter from your father showing the funds were gifted to you, and he has to show the funds were his to gift. If you can wait another month, the funds will have seasoned as they only ask for your last 2 months of statements.

I have Wells Fargo asking for statements all that way back to Oct/Nov 2012, so a lot longer than 2 months.
Yes, they will want to know about the deposit, especially if when you turned in your assets statement, you included that amount in your assets before paying the bills with it.
Even though I'm a little/no risk borrow, I've been frustrated with the amount of information I've had to supply. It's taken a lot of time, etc going through online records, file cabinet, etc looking for everything their requesting.
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Old 03-15-2013, 02:45 PM
 
98 posts, read 634,156 times
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Quote:
Originally Posted by lenniel View Post
I have Wells Fargo asking for statements all that way back to Oct/Nov 2012, so a lot longer than 2 months.
Yes, they will want to know about the deposit, especially if when you turned in your assets statement, you included that amount in your assets before paying the bills with it.
Even though I'm a little/no risk borrow, I've been frustrated with the amount of information I've had to supply. It's taken a lot of time, etc going through online records, file cabinet, etc looking for everything their requesting.

Right there with you! It's unbelievable. My husband and I were just discussing how ridiculously OVER regulated everything it is now. Beyond common sense. I'm wondering what else the mortgage company is going to ask for before closing? I'm afraid to pack because chances are there will be some random ridiculous thing I need to dig up.
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Old 03-15-2013, 04:24 PM
 
Location: Kansas City North
4,402 posts, read 7,622,287 times
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Quote:
Originally Posted by BacktoCO View Post
Right there with you! It's unbelievable. My husband and I were just discussing how ridiculously OVER regulated everything it is now. Beyond common sense. I'm wondering what else the mortgage company is going to ask for before closing? I'm afraid to pack because chances are there will be some random ridiculous thing I need to dig up.
It got to such a point with me that I offered the loan officer to get my medical records from my gall bladder removal, and I was half serious.

I was liquidating some mutual funds for part of my down payment, and because the market was very volitile at the time, I sold off a little bit just about every day for six weeks. That threw them into a big time tizzy.
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Old 03-16-2013, 12:10 AM
 
Location: Funkotron, MA
1,203 posts, read 3,177,387 times
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Can someone explain to me WHY they need to verify large deposits?
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Old 03-16-2013, 09:59 AM
 
4,561 posts, read 8,631,532 times
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Quote:
Originally Posted by justusandthekids View Post
We received a large sum of money from my father-in-law about a month ago which we deposited into our checking account then immediately used to pay off some credit card debt.
Dont spend it all yet. If it was over $13k, you will likely have to pay a good amount of taxes on it. If you ignore it, and dont pay the IRS, you may get a letter 3 years later, or more asking for the money. They wont catch it right away, but they will catch it.
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Old 03-16-2013, 10:54 AM
 
Location: NY/LA
3,512 posts, read 2,948,031 times
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Quote:
Originally Posted by raveabouttoast View Post
Can someone explain to me WHY they need to verify large deposits?
I think the objective is to verify that the money is yours, and isn't coming from a loan that you would have to pay back.
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