Mortgage Documentation Help (AKA I made all tlhe mistakes).

[Karen Johnson]

Hello,

Trying to secure a  mortgage for my first (deliberate) investment property and I made some mistakes. Now, I'm worried they won't approve the loan. Contract has financing contingency and contingency needs to be met in 2(!) days. If you summarize it, I really made 2 major mistakes (one of them repeatedly).

1 - Having someone else pay the earnest money deposit because I was out of town. Now, the lender needs to see me write them a check for this amount because they want to see that I did not borrow the money. It is that the money was actually owed to me, but there's no formal promissory note (short term family loan for real-estate related reasons). However, bank wants me to "re-pay" the funds for the sake of documentation. This would not be a problem if not for

2 - Moving lots of large amounts of money around in my accounts. All above board. All explainable. Not all easily documented. Largely done before we even found the property and after we were initially told conditions were all satisfied (but they were not). Now most of the money is in accounts not previously presented, and I'll need to explain (and document as well as I can) the transactions. That's the hard part.

My main concern - I'm going to try and document as much as I can. I'm not sure if it will be enough or not. I do have a financing contingency. as mentioned. If I don't get the commitment, what are my options, given that I am scheduled to close on 9/30? I believe I'm at risk of losing my earnest money. It will hurt if I do. 

Any advice for me? I'm already working on the documentation, but figured I'd post here in case there are options I haven't thought about. If there are any lenders reading this who want to PM me, I'm happy to explain in more detail to get the best advice possible.

[Shaun Weekes]

@Karen Johnson

Although these can be potentially big errors your Loan Officer should have advised you on the process.

The EMD deposit has to be fixed so try and get that done ASAP unless you want to pull out of the deal. If you have no appraisal yet I would recommend getting out.

In regards to the bank account if it's a business account then you're fine because these accounts don't need money to be sourced and seasoned. In other words, business accounts don't adhere to the seasoning and sourcing rules. They're exempt!

If it's a regular bank account, you could be in trouble if you can't source and season the deposits.

With investors or home buyers in general it's imperative that you have a checking account or savings account that has your reserves. Don't touch that account unless it's a deposit that you can document. You only need to document the deposit for 60 or 2 bank statements.

Open up a separate account for bills, food whatever.

I hope this helps and PM me or post here if you have any other questions.