Glendora Homebuyer’s With Cash Are Not Guaranteed A Mortgage Loan!
Money Talks
Normally, as the old saying goes ,“Money talks and @&%# walks”, holds true …
Except when some potential Glendora home buyers are trying to obtain a mortgage loan to purchase their dream home.
Can’t Judge A Book By Its Cover
Recently, I have been encountering more and more potential home buyers who for all intents and purposes appear to be the “perfect” candidate for a mortgage loan. Some of their characteristics are:
- high credit scores
- strong employment history
- low debit to income ratio
- significant sums of cash in their banking account statements
The problem arises when the mortgage loan lender begins sifting through the financial documents submitted by the perspective buyer, and they find large deposits of cash in the bank statements that do not match up with deposits of pay stubs.
The lender will then request written documentation verifying exactly where these funds came from. Without a verifiable “paper “trail, the lenders will not be able to include these funds when computing the eligibility of the buyer for the loan.
I was just involved in a real estate transaction as the buyer’s agent and found out, after entering escrow on the home of their dreams — that they simply didn’t qualify for a mortgage loan. In their particular situation, the husband owned a body shop and was paid cash for a lot of the repair work. In addition, they would fix vehicles up and resale them for a profit, which again was in cash.
Not trusting the stock market or the financial institutions, they simply kept their cash deposits in a safety deposit box. Little did they know that this strategy would result in them being denied a loan, as they could not prove that the cash had been in the safety deposit box or, when and where it originally came from.
Why The Banks Would Not Just Accept The Cash
If you are wondering why the banks would not just accept the cash as belonging to buyers and taking it into consideration when conducting the pre-approval process, the answer is simple…the banks are required to verify where the funds were derived from to curtail illegal money laundering.
This was a very painful lesson for them to have to learn and I am hoping that by sharing this scenario it may prevent other buyers from finding themselves entangled in the same mess.
In Conclusion
If you have any questions about obtaining a home loan and you fit in the category of buyer above, let me know. Feel free to share you questions/comments with the community by leaving a comment below. Or feel free to contact me directly.
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Lorelle Kitzmiller
Realtor®
DRE Lic. #01509699
Phone: 626-926-1316
If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully. Each office is independently Owned and Operated, Except Offices Owned and Operated by NRT LLC. Coldwell Banker Millennium fully supports the principles of the Fair Housing Act and Equal Opportunity Act.
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