Many home buyers think they have all their financials in order only to have a lender ask for a paper trail or source for their funds. Lenders get nervous when they see large cash deposits, gift money and regular transfers of money, and often ask buyers to show documentation for the source of the money, be it a side job or a gift. If the money is a gift, home buyers need to show where the money came from and get a signed letter stating that the money is a gift and not a loan.
In summary, it’s not difficult to avoid the major mortgage mistakes commonly made by home buyers. A well-prepared buyer should fully understand how much home he or she can afford before shopping for a mortgage, shop around for reputable but low-cost lenders, review credit scores and financials before applying for the loan, and have a paper trail for all funds.
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