When my husband and I put in an offer on a house in September 2019, I figured the hardest part would be saying goodbye to a decade\u2019s worth of savings to afford the down payment.<\/p>\n
That part was difficult. But so was the document-hunting beyond the\u00a0typical paper trail<\/a>\u00a0like bank statements and tax returns our lender required.<\/p>\n Granted, our situation was complex: We\u2019d casually attended an open house and fallen in love with the home, but we hadn\u2019t even sought a\u00a0mortgage preapproval<\/a>\u00a0yet. So we were approaching the process a bit out of order and were underprepared for the paper chase that ensued as a result. Add to that a seller who wanted to close quickly, and we were in for a total scramble to the finish line.<\/p>\n We got the loan, but here\u2019s what I wish we\u2019d been better prepared to track down or explain.<\/p>\n To fund part of our down payment, I recently sold some shares in a company I used to work for. Any such large, one-time deposits into your checking account around the time of a mortgage application are bound to raise a lender\u2019s eyebrows, and indeed we were asked for proof of the source of this transaction.<\/p>\n I provided the form I signed indicating the number of shares I sold, but that was insufficient as far as the lender was concerned. I then had to contact my former employer to get documentation of a wire transfer the company had initiated \u2014 extra legwork for our already short timetable.<\/p>\n \u201cThe reason lenders scrutinize these atypical deposits carefully is they want to make sure the buyer didn\u2019t borrow money to help them cover the down payment, which is prohibited,\u201d Brian Davis, a real-estate investor and co-founder of SparkRental.com, which provides automated rental services for landlords and property managers, said via email.<\/p>\n Also read: <\/strong> Mortgage rates remain stable to start 2020 \u2014 and that could mean an early start to the spring home-buying season<\/a> <\/p>\n Ideally, you\u2019d avoid moving around large sums of money like this during a mortgage application. But circumstances and time frames differ, and you may already be receiving deposits beyond your usual paycheck: a bonus, alimony or child support, income from gig work or rental properties. Just know that your lender will want to find out more about those deposits.<\/p>\n Large transfers out of your account can also lead to lender questions, as Gregory Harrison of Rockville, Maryland, found out. He and his wife paid a travel agent for their honeymoon via\u00a0Automated Clearing House withdrawals<\/a>\u00a0from their bank account, all while undergoing a mortgage underwriting process.<\/p>\n \u201cOur lender originally told us we could pay [this way] and it wouldn\u2019t throw up red flags,\u201d he messaged me. \u201cWell, it did.\u201d Harrison remembers the bank continuously questioned them about the withdrawals.<\/p>\n The couple successfully pushed back, showing receipts from money transfers and noting that they\u2019d already informed their loan coordinator of the transactions ahead of time.<\/p>\n Takeaway:<\/strong>\u00a0Bank statements alone may not be enough. Save things like receipts and records of investment sales, too. You can also provide a letter explaining the reason behind the deposit or withdrawal.<\/p>\n You may think your rental history no longer matters once you plan to own, but lenders may often request proof that you were a responsible renter, say, a record of on-time rent payments going back 12 months.<\/p>\n I switched banks when we moved to our current city, and we rented here for only five months before applying for a mortgage. That meant I had to produce proof of seven more months of rent payments. But I no longer had access to my old checking account and online bill-pay records.<\/p>\n1. Documents from a former employer<\/h6>\n
2. Records from a long-ago landlord<\/h6>\n