Home Buying in 55803>Question Details

2ndtimeBuyer, Home Buyer in 55811

Question about Earnest money potential issue?

Asked by 2ndtimeBuyer, 55811 Tue Jun 11, 2013

We were pre-approved for a loan and as of yesterday have submitted the final application for approval. We have an offer on a house costing significantly below the amount we were pre-approved for. We wrote a check for 3k earnest money at the time of our offer.

We are now worried about issues with that - we had just had a student loan refund deposited in our account. All educational expenses for the semester were paid for already, and the student loan in question will not go into repayment for 2 years. We DO have funds in addition to this that we could apply now but, on that specific day, our account will look like the student loan refund was our earnest money. Is this going to cause a denial, or will it be able to be worked out? Will they even care, or could the money be disallowed and redone somehow? I am so worried now :-(

Besides this, I am not too worried - we have decent credit, more than sufficient income for the home we are buying, etc...

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Answers

6
Hi, 2ndtimeBuyer!
So pleased for you that you're moving forward now as opposed to later. Interest rates are inching their way up and very soon, buyers will have less buying power than they do today or have had for the last few years.

In any event, you should be fine with this. As all of my colleagues have said here, it's a matter of just disclosing where this came from. I mean, it's not like the underwriter is ONLY looking at this money to approve your loan. They will "get it" when they see the paper trail. You sound like you're doing everything right, you didn't go out and incur new long term debt!!!

May I ask, why haven't you posed this question to your lender?? They would be the best person to counsel you on this matter. Next would be your own agent. Even as a 2nd time buyer, it's important to have your own agent.

Good luck!
0 votes Thank Flag Link Tue Jun 11, 2013
It would appear you took out a school loan to pay earnest money. I would have $3K in reserve just in case this comes back to bite you.
0 votes Thank Flag Link Tue Jun 11, 2013
I do worry it will appear this way - although it was only a matter of coincidental timing. I wish we had thought of it at the time!
I've been in school (grad school) for a year and still have 2 years left.
Flag Tue Jun 11, 2013
I would not worry too much, I would say to call your lender and run this past them also. If you had additional money in your account and not just the student loan refund you are fine I am sure. The only time I think you really have to worry about "seasoned" funds is with your down payment money at closing. I would double check with your lender to be sure though. Good luck to you!! :)
0 votes Thank Flag Link Tue Jun 11, 2013
Speak with your loan officer since financing is so person specific and let them know your concerns, they can let you know if it may be an issue or talk to the underwriter about it before it comes to light.
0 votes Thank Flag Link Tue Jun 11, 2013
Stay in the moment. Real estate transactions take place one step at a time. Your lender and your agent will keep you on the right track. Liz, 612-986-4105

PS Enjoy your new home...you will save in the long run, and when you get ready to begin repaying the student loan, you will have more economic stability because you are in your own home.
0 votes Thank Flag Link Tue Jun 11, 2013
Rest easy, 2ndtimebuyer! :)

This one is easy. It's all about paper trailing and documentation. If I am reading this correctly, you are concerned about the student loan refund deposit, correct? Just provide documentation showing what that deposit was. In other words, you will need to source that deposit.

Voila! You are done.

Best wishes to you,

Sherri Sherpy
The MN Mortgage Mom
612-363-1106
sherri@iloanhomemortgage.com
0 votes Thank Flag Link Tue Jun 11, 2013
I was just worried that the bank won't like that at the time of writing our earnest money check, the student loan deposit had been recently made. Bad timing I suppose. I can definitely provide the documentation verifying where the deposit was from, that's easy - was just concerned they wouldn't like it lol
Flag Tue Jun 11, 2013
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