Funds and Fund Source
Now that your closing date is fast approaching, it’s time to confirm the funds for your down payment.
*Remember the down payment is a different amount than your closing costs. In addition to the down payment you need approximately 3% of the purchase price on top of the down payment available in cash for the closing costs.
Your lender will discuss with you the regulations and rules about where this money can come from. If any of these funds are going to be gifted to you from a family member, you need to let your mortgage lender know ASAP so he/she can get approval from the underwriter. You will need to have a gift letter that details the money given and in some cases, the giver will need to submit bank statements tracking their gift. Your lender will give you gift requirements, who can gift, how much, and how to go about it.
Down payment funds disclosure is crucial since your funds have to be proven and tracked. The accounts used to supply down payment and closing cost monies must be disclosed to your mortgage lender. You need to prove you aren’t pulling wads of cash from under your mattress and you aren’t being funded by terrorism. (I’m not making this up, this is a real thing and you will be required to sign documents saying you aren’t.) If either of these points present an issue for you, call your lender right now.
Due to changes being made at the Federal level to lending practices, beginning in October 2015, you will receive your HUD statement a minimum of 3 days before your closing date for review. If you do not receive this statement with a minimum of 3 days, your closing date will be delayed.
Payment via Wire Transfers
Now that you’ve shown where your payment is coming from, we need to discuss how you’ll bring it to closing.
Gone are the days of cash, personal checks and cashier’s checks. You will be wire transferring funds from your bank to the title company. Be aware there is a wire transfer fee, usually around $50.
Your title company will give you instructions on HOW to make your wire transfer of funds. Typically, you will wire transfer these funds in one lump payment the DAY BEFORE CLOSING before 4pm. It is crucial that these funds be wire transferred in the manner and timeframe your title company has instructed you to do. If there are errors, it could delay your closing or worse cause a time breach in your contract. Document everything, get receipts, bank branch location, bankers’ names, note times of day etc.
Find out what the bank and your title company’s cut off times are for wire transfers. It’s frequently around 4pm. That means you’ll have to do the wire transfer by that time the day before closing in order for it to go into the title company’s account on time. Once you’ve done the wire transfer, email me and your mortgage lender so we can follow up with your title company on their receipt.
At closing, if you have any overage/extra money you paid in, you will be refunded at the very end of the closing via a check. If you receive a check, please wait 48 hours to cash it or deposit it.
Lastly, ask your boss off from work the day before, so that you can take care of this transfer. Maybe take a long lunch? Just ask in advance.
PLEASE NOTE: There have been a number of hackers and scammers trying to divert (ie. steal) closing funds away from title companies and deposit to their personal accounts.
Generally, the wire transfer instructions will be emailed to you from your title company or occasionally from your lender. DO NOT FOLLOW WIRE TRANSFER INSTRUCTIONS SENT FROM ANYONE ELSE. ONLY FOLLOW WIRE TRANSFER INSTRUCTIONS SENT TO YOU BY YOUR TITLE COMPANY OR YOUR MORTGAGE LENDER. Take it a step further, verify that the wire transfer instructions you received are legit, call the title company or your lender so that they can verify account numbers and instructions with you via phone.
Questions? Call me @ (615) 977-8444 or email whereyoulivetn@gmail.com