01
Oct
By Mike Pfefferman
Mortgage Tips

Why the Money in Your Bank Account May Need a Paper Trail Before Closing

Having enough money in the bank is an important part of buying a home, but during the mortgage process, the amount in your account may not be the only consideration. In certain situations, lenders may also need to understand where funds came from. That can surprise buyers who assume that once money reaches their account, its history no longer matters.

Mortgage Funds May Need to Be Documented
During the mortgage process, buyers may provide bank or asset statements showing money available for the transaction.

If an account contains certain recent deposits that are not easily explained by the documentation already provided, additional information may be requested.

The purpose is not to question every dollar a buyer spends or receives. Mortgage guidelines may require lenders to verify certain funds being used in connection with the purchase.

Moving Money Can Make Things More Complicated
Buyers sometimes reorganize their finances before purchasing a home.

They may transfer money between checking and savings accounts, move funds from an investment account, deposit proceeds from selling personal property, or receive money from another person.

Even when the funds are legitimate, multiple transfers can create more documentation because the movement of money may need to be traced.

Keeping records can make that process considerably easier.

Gifts Have Their Own Requirements
Some buyers receive financial assistance from an eligible family member or another permitted source.

Depending on the mortgage program, gift funds may be allowed for some or all of the money needed for the transaction. However, there can be documentation requirements regarding the gift, donor, transfer, and source of funds.

Do not assume that depositing a large check into your account is all that is required.

Avoid Unnecessary Financial Shuffling
Before closing, simplicity can be valuable.

If you are considering moving a large amount of money, making an unusual deposit, changing bank accounts, or receiving funds from someone else, ask your mortgage professional what documentation may be needed.

Save statements, transaction confirmations, deposit records, and other relevant documentation rather than assuming you will never need them.

Money being available and money being properly documented are not always the same thing during a mortgage transaction.

You do not need to stop using your bank accounts normally while buying a home. But understanding that certain funds may require a clear paper trail can help you avoid scrambling for documentation when closing day is getting close.

25
Sep
By Mike Pfefferman
Home Buyer Tips

Why a Condo’s Finances Can Matter Almost as Much as Yours When Getting a Mortgage

When applying for a mortgage, buyers expect their income, credit, debts, assets, and employment to receive plenty of attention. Condo buyers can encounter another layer that sometimes comes as a surprise. Depending on the financing being used, the financial and operational condition of the condominium project itself may also matter.

You Are Buying More Than the Unit
A condominium purchase usually includes ownership of an individual unit along with an interest in shared areas and responsibilities.

Those shared responsibilities are typically managed by a condominium or homeowners association. The association may collect dues, maintain common areas, purchase certain insurance coverage, fund reserves, and manage major projects.

Because the condition of the overall project can affect the property securing the mortgage, some loan programs may require information about the condominium development in addition to information about the borrower.

Reserves Help Tell a Story
Condo associations frequently maintain reserve funds for future major expenses.

Roofs, elevators, exterior surfaces, pools, parking areas, plumbing systems, and other shared components eventually require maintenance or replacement. Adequate planning for those expenses can help an association manage major projects without relying entirely on sudden assessments.

When reviewing a condo, buyers should pay attention to the association’s financial information and ask what major projects may be approaching.

Special Assessments Can Matter
If an association does not have enough money available for a major expense, owners may face a special assessment.

For a buyer, an assessment can mean an additional financial obligation beyond the regular monthly HOA dues and mortgage payment.

Existing or anticipated assessments can also raise questions during a transaction, making it important to understand what has already been approved and what may be under consideration.

Insurance and Other Project Issues May Be Reviewed
Depending on the mortgage program, other characteristics of the project may also receive attention.

Insurance coverage, pending litigation, property condition, owner occupancy, commercial space, and other factors can potentially become relevant. Requirements vary, which is why a condo that works with one financing structure may present challenges with another.

Investigate the Condo Before You Commit
A buyer can have excellent credit, stable income, sufficient savings, and a manageable debt load while still encountering a financing issue connected to the condominium project.

That makes condo shopping different from evaluating many traditional single-family homes.

Before assuming that mortgage approval depends entirely on your own financial strength, ask whether the condominium itself meets the requirements of your planned financing. When buying a condo, both your finances and the property’s finances can become part of the mortgage conversation.

24
Sep
By Mike Pfefferman
Home Buyer Tips

What Happens When the House You Want Has a Solar Loan Attached to It?

Solar panels can be an appealing feature when shopping for a home, especially for buyers interested in energy efficiency. But seeing panels on the roof does not tell you who owns them or whether money is still owed. If the solar system was financed, the outstanding obligation can become an important part of the home purchase conversation.

First Find Out Who Owns the System
Solar arrangements can vary. The homeowner may own the system outright, be paying off a solar loan, or have another type of agreement associated with the equipment. Those distinctions matter because purchasing the house does not necessarily make every financial obligation connected to the solar system disappear.

Buyers should determine how the system was acquired and request documentation early in the transaction.

An Outstanding Loan Raises Questions
If the seller financed the solar panels and a balance remains, buyers need to understand what is supposed to happen to that obligation when the property changes hands.

Depending on the agreement, the seller may need to satisfy the balance, or there may be provisions involving a transfer to the buyer. The specific contract and financing arrangement will determine what options are available.

If a buyer is expected to assume an obligation, that additional payment may also need to be considered as part of the buyer’s financial picture.

Ask About More Than the Monthly Payment
The amount of the solar payment is important, but it should not be the only question.
Buyers should understand the remaining balance, length of the agreement, transfer requirements, warranties, maintenance responsibilities, and what happens if the roof needs replacement or repair.

It is also useful to review actual energy bills rather than assuming that solar panels automatically produce a particular amount of savings.

Do the Research Early
Solar financing can become more difficult to address when it is discovered late in the mortgage process.
If a home has solar panels, buyers should ask about ownership and financing before assuming the system is simply included with the property. Relevant documentation can then be reviewed by the appropriate parties while there is still time to address questions.

Solar panels themselves do not have to make purchasing a home complicated. The key is knowing what comes with them.

Before falling in love with the idea of lower energy bills, find out whether you are looking at a fully owned home feature or a system that still carries a financial obligation.