Congratulations on your accepted offer!
Buying a home is both exciting and intimidating, and our process ensures a stress-free, on-time closing. While in escrow, let’s talk before:
- Applying for any new credit (charge cards, credit cards, cars, etc)
- Making large deposits into any accounts
Also, keep all credit card/ mortgage payments current and please don’t leave your job :-)
What happens after your offer is accepted?
The timeline below provides an overview of the activities, roles, and responsibilities of the many teams working together to finance your new home!
Earnest money/ good faith deposit:
This is due within 3 days of an accepted offer. The amount is specified in your contract and should come out of one of the accounts we’ve previously verified (using an un-verified account can cause a delay). Expect to provide a transaction history from the account showing:
- All transactions since the last statement date
- Earnest money deposit clearing the account
- Ending balance
- Account number, last four digits of account number, and/or customer name
- Screen shots aren’t accepted, instead, print the pages with the URL displayed
Downpayment funds/ funds to close:
Funds should be liquidated immediately and verifiable as cleared funds (vs pending) in a bank account by week 2.
- If using a 401k loan, initiate immediately. Some 401K providers can take weeks to complete the loan
- If using investment account funds, initiate immediately. These may need 3-5 business days to liquidate assets
- If liquidating funds from a retirement or investment account, please provide:
- From retirement/ investment account, send the transaction history from date of last statement showing funds being liquidated with updated ending balance
- From receiving bank account, send the transaction history from date of last statement showing funds being received and cleared with updated ending balance
- Only wires or cashier’s checks are accepted at closing
- Some accounts, like CapitalOne 360, don’t offer wire or cashier’s check options so plan ahead.
- Wire fraud is on the rise. Always call the escrow company to verify wire instructions.
Some buyers worry about researching the perfect insurance policy but remember, policies can be easily changed after close.
- Name on policy – must match the way you want your name to appear on title, specify full name, with middle name, with middle initial, etc
- Effective date – at least three days prior to escrow close date
- Mortgagee – I’ll provide this
Receiving our conditional approval means that the underwriter has issued loan approval, provided we can send in their additional ‘conditions’. This tongue-in-check checklist of condition documentation I found online gives a great perspective on what to expect. Loan officer humor :-)
- 2 years Tax Returns, Federal/State/Business, all pages
- If you extended 2016, send the extension, and 2014 and 2015 returns
- Two months' bank statements, all accounts, all pages, even that last blank one
- If you have more than enough accounts, we might not need the little ones, your mileage may vary
- REFINANCE: Send Declarations page from your homeowner's insurance policy
- Retirement accounts - pdfs not screen prints, all pages
- Check copies for rent payments for the past year - if you've been paying rent in cash, or if the checks do not perfectly match the rental agreement, get ready
- Divorce Decree, all pages, if applicable
- Proof you are actually receiving child or spousal support (check copies)- also, it must be Court Ordered
- HUD1 from previous short sales or foreclosures
- Bankruptcy discharge if applicable
- Maybe even all the bankruptcy papers. #Fun
- Social Security /Disability Award Letter - the one you get every year saying "this is how much you get"
- Proof of continuance of Disability
- VA: DD214. COE, disability letter if applicable. God bless you and thank you.
- Self Employed? We're using Line 31 of Schedule C's, or full business returns, need the K-1, need Articles of Incorporation, need proof of when you started the business, if you shifted from S/E to a W2 job, or vice versa in the past two years, strap in.
- Bonus Income? Go ahead and dig up end of year paystubs for the past two years so we can average it. I'm sure you kept them, laminated and handy right on the refrigerator.
- Same deal with W2 income that includes overtime or is part time
Part time = any income where the employer will NOT say that you are designated as Full Time with a guaranteed minimum of 40 hours per week.
Pregnancy leave? We're gonna need the kid. Not really. Just a letter, and a copy of the leave from your employer, and proof you went back to work.
- New job? How new? Are you contract or really full time? Can of worms
- Buying a home with a wood stove? Check this out: If it is not certified, or certifiable, it will have to be removed and the hole capped. Then after close, nobody really cares if you put it right back. I didn't say that.
- Letters of Explanation (LOEs): These can literally be one sentence at times, and they tend to 1) document the obvious and 2) really annoy. Make sure you sign and date them.
- Credit: LOE for every single inquiry on your credit report, including the one made by the bank to whom you are making this very application
- Derogatory Credit: Collections, late payments, post-bankruptcy derog's. You’re borrowing hundreds of thousands of dollars, sight-unseen. Make it look good, make it look like you care.
- Job changes, gaps in employment, inequities between paystubs and deposits, inequities between W2s and Verifications of Employment (VOEs)
- BANK STATEMENTS - THIS IS YOUR FAVORITE: Every large deposit over, say $3000+, on any of your bank statements, that cannot be readily connected to payroll or some form of income must be fortified with: an LOE, and then a copy of the actual check and deposit slip from that deposit.
- The real fun here is if you move your own money around, then we need THAT statement from where the deposit came, and ....wait for it.....
- Then THAT statement will be inspected for deposits over $3000, and down the rabbit hole we go
- This is typically where I lose credibility and any hope for referral business
- If you are flying solo and your spouse or anyone else's name is on your bank statements, we need a letter from them saying you have full access to all funds in the account
- If the credit report has a HAWK flag, or shows a business at that address from whenever, you need to write an LOE explaining that you have no idea what the heck that is
- OK, I can't believe this is my job
The comparison chart below is informational, please seek professional counsel from an attorney and/or CPA to determine legal and tax consequences of how title is vested.