Rental Property Investor · Florence, SC · Member since 2019 · 10 posts · 3 votes
I am in due diligence period on my first investment property. My question is: should I send all my funds into my business checking account to use it as the down payment and closing costs account? Or just leave it in my personal savings and transfer from it when the time comes.
My concern is that the mortgage company may not like such a large transfer before closing. Is this a valid concern or just transfer it and treat it like a business.
I am in due diligence period on my first investment property. My question is: should I send all my funds into my business checking account to use it as the down payment and closing costs account? Or just leave it in my personal savings and transfer from it when the time comes.
My concern is that the mortgage company may not like such a large transfer before closing. Is this a valid concern or just transfer it and treat it like a business.
Thank you in advance.
It is a valid question, because the bank will sometimes ask for updated bank statements closer to closing. As long as the minus from one account is a plus in the other, it doesn't matter. However, going out and buying a sports car right before closing is not advised.
I am in due diligence period on my first investment property. My question is: should I send all my funds into my business checking account to use it as the down payment and closing costs account? Or just leave it in my personal savings and transfer from it when the time comes.
My concern is that the mortgage company may not like such a large transfer before closing. Is this a valid concern or just transfer it and treat it like a business.
Thank you in advance.
It is a valid question, because the bank will sometimes ask for updated bank statements closer to closing. As long as the minus from one account is a plus in the other, it doesn't matter. However, going out and buying a sports car right before closing is not advised.
I can tell you from experience because I'm going through this right now. I've purchased my first two properties last year, just closed on a third, and in the underwriting process for a 4th. All money came out of my personal checking account. I did transfer funds from other investment accounts to my personal account and they will ask for a paper trail for that, but they didn't care that ultimately it's from my personal account. I use two lenders and both were the same. All conventional 30yr where I'm the only person on the deed and loan, your situation might be different.
To @Joe Splitrock point, I did finance a car in the middle of closing on one property and going under contract on another. The creditor will actively monitor any credit inquiries during 120 day period. They saw this pop up and I had to fill out a form stating why I opened the credit line and send over the auto loan paperwork and we were good. However, the loan did not really affect my credit score or put me over 45% debt: income ratio. Your personal situation might be different. I would take Joe's advice, it was just poor timing as I was waiting 6 months for my car to be built and delivered and it happened to be in the middle of closing on two properties.
I can tell you from experience because I'm going through this right now. I've purchased my first two properties last year, just closed on a third, and in the underwriting process for a 4th. All money came out of my personal checking account. I did transfer funds from other investment accounts to my personal account and they will ask for a paper trail for that, but they didn't care that ultimately it's from my personal account. I use two lenders and both were the same. All conventional 30yr where I'm the only person on the deed and loan, your situation might be different.
To @Joe Splitrock point, I did finance a car in the middle of closing on one property and going under contract on another. The creditor will actively monitor any credit inquiries during 120 day period. They saw this pop up and I had to fill out a form stating why I opened the credit line and send over the auto loan paperwork and we were good. However, the loan did not really affect my credit score or put me over 45% debt: income ratio. Your personal situation might be different. I would take Joe's advice, it was just poor timing as I was waiting 6 months for my car to be built and delivered and it happened to be in the middle of closing on two properties.
Thank you Joe and Matt. I will follow up with my lender also. No car buying for me... at least until after closing.
I talked to my lender. They said as far as car buying goes, as long is it is on my wife's credit it is okay because she is not on the loan. My credit is off limits until after closing.
As far as the transfer goes, they just asked for statements for the accounts involved and I told them the statement won't show the transfer because of the closing date is before the next statement. They said I can make the transfer, but that may be because the bank and the lender are the same entity. Just sharing. @Joe Splitrock@Matthew Terry.
I talked to my lender. They said as far as car buying goes, as long is it is on my wife's credit it is okay because she is not on the loan. My credit is off limits until after closing.
As far as the transfer goes, they just asked for statements for the accounts involved and I told them the statement won't show the transfer because of the closing date is before the next statement. They said I can make the transfer, but that may be because the bank and the lender are the same entity. Just sharing. @Joe Splitrock@Matthew Terry.
Now onto the transfer limit...lol.
They only way they know what happens in your bank account is if you send them statements. In my experience, they get statements during underwriting, but don't ask again before close. Credit gets monitored until closing to look out for things like car loans. My lender told me one of his clients financed a car two days before closing and they pulled the mortgage on him. Obviously it depends on the individual if a large purchase like that is a problem, but better to air on the side of caution.