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My husband and I are relocating for his new job and have our preapproval for our loan. One thing the lenders have mentioned is that we will need downpayment, closing costs and 2-3 months reserves in bank to avoid any issues. Our problem is that my husband has already started his job and is living in temp housing until we find our own place. The temp housing, closing costs, and cost of moving are all a part of his relocation package, but the costs are being reimbursed rather than paid up front. (What isn't spent is also being paid to us as a signing bonus.) However, we are needing to spend about $6000 for the move and a minimum of $6500 for the temp housing, both of which will be paid before closing. That's our 3+ month reserves plus part of our closing costs. We have it all in the bank now, plus a little extra, but how do we handle this with the bank? We obviously don't want to charge on the credit card because that just weakens are income to debt ratio. Is there a way for the lender to acknowledge the relocation package? I know they often want the funds in your account for a certain period before you close, but we have to pay these expenses before we are reimbursed! Any thoughts will be appreciated. Thanks!
From my understanding it is all about knowing where the money came from and being able to show where the funds are coming from. It is all about the paper trail. In your situation you will be reimbursed from the employer for your expenses. Here is what you can show.
1. The money is in the bank now.
2. That money will be spent from your account to relocate to the new home. Keep a hard copy record of the expense and always pay with a check to do this. Keep copies of your checks.
3. You will be reimbursed from the company in the end. They will be paying you back the money that you just spent. Hopefully this will be noted some how on your check stubs or some kind of receipt from the company.
4. You will then use the reimbursed money to complete your housing transaction. Your paper trail is complete.
Maybe someone else can give more of an informed explanation. From what I think I learned, and that is from completing only one real estate transaction, as long as you can prove where the money came from you should be fine. Many people will tell you to leave the money in the bank for 90 days lets say to season the funds. The longer the cash is in the bank the better. From what I heard the lending institutions only look at a few months back of bank statements anyway. That is the reason for that. The big thing here is to make sure that the money is clean and that it is yours in the first place. I think that you are covering this base anyway by having the paper trail you explained in your post.
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