Don’t Move Money Around

When a mortgage lender starts to review your loan package for approval, one of the primary things that they are concerned about is the source of funding for the down payment on your purchase and for closing costs. It’s highly likely that your mortgage loan originator will ask you to provide statements for the last several months on any of your liquid assets. So what exactly are your liquid assets? These include things like checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401(K) and investment retirement accounts.

If you have been transferring money between your accounts recently, there may be large deposits or withdrawals noted on the statements of your accounts.

The mortgage loan underwriter (the person who actually approves the funds for your loan) will more than likely require a complete paper trail of all of the withdrawals and deposits on your accounts. You may be required to produce cancelled checks, deposit receipts, pay stubs, and other seemingly inconsequential data — which can be a tedious process.

It can be easy to become exasperated at your mortgage lender, but it’s important to know that they are only doing their job correctly. To ensure high quality control, protect consumers’ interests and eliminate potential fraud, it is a requirement on most mortgage loan originations to completely document the source of all funds being used in a new loan. Moving your money or assets around, even if you are consolidating your funds for convenience purposes, could make it much more difficult for the lender to properly document.

So it’s best to leave your money where it is until you talk to a mortgage loan originator. And make sure that you don’t change financial institutions, either.


Next, we’ll explore what the effect of changing jobs has on your ability to qualify for a new mortgage loan.