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Security Deposits for California Real Estate Purchases

The home buying process normally requires security deposits from buyersto assure sellers that they are acting in good faith. Deposits should be handled in a specific manner in order not to delay the loan approval process. This blog offers information on security deposits for California real estate purchases.

Source of Funds

It is critical for home buyers to utilize personal funds for security deposits. Many mortgages specifically require buyers to use personal money for all expenses connected to the transaction. Buyers are normally asked to submit copies of bank statements showing that the money was already available in their bank account and that security deposits were taken from that account. Bank accounts should also show enough amounts to cover closing costs and down payments. Mortgage companies will verify all this information as part of the loan underwriting process. Buyers failing to use personal money may impact their ability to obtain a home loan.

Gifted Money

Certain types of home loans permit gifts to buyers from their family members. However, home buyers should not ask family members to make security deposits for them. The preferable procedure involves a gift letter, copies of account statements from the gift giver showing where the money originated, and then bank statements from the buyer showing receipt of the funds. Keeping with proper steps can lead to fewer delays when underwriters review the loan application.

Preparing for Security Deposits for California Real Estate Purchases

Buyers thinking about an upcoming real estate purchase can take a few steps to reduce delays with their loan approval. First, they should ensure all funds required for security deposits, down payments, and closing fees reside in personal accounts and are verifiable. Keep several months of bank statements available. The statements should not include any odd transactions (such as deposits from unknown sources). Finally, when submitting security deposits for California real estate purchases, buyers should utilize funds from their own accounts. If accepting gift money, ask your loan advisor for the necessary procedure prior to receiving the gift.