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Unformatted text preview: source of the additional funds. For example, say the balance in the account has been approximately $1000, but at the time of the verification the balance is $10,000. The lender will question the source of the additional funds. If the additional funds are a gift from the parents of an applicant, the lender will require a gift letter from the party giving the money. If the Dynasty School (www.dynastySchool.com) 13-13 REAL ESTATE FINANCE
additional funds are from a bequest from a will, a copy of the will and a letter from the administrator of the estate may be required. If the additional cash is due to the sale of property and is so stated at the time of the application or in the initial meeting, the prospective homebuyer will be required to provide the lender with a copy of the earnest money contract if the transaction has not closed. If the transaction is closed, or upon closing, the prospective homebuyer must provide the lender with a copy of the closing statement, 'showing the proceeds to the seller and signed by all parties to the transaction. Some lenders will require a copy of the seller's proceeds check and a copy of the deposit slip. These are only a few of the types of situations that may arise in determining the amount and source of the down payment and closing costs. CO–BORROWING
What effect do multiple borrowers–more than one borrower on a loan–have on an application for a real estate loan? The technical name lenders give a sole borrower is mortgagor. If there is more than one borrower, we have co–mortgagors (often husband and wife), sometimes called co– borrowers. Co–mortgagors sign the note and deed of trust and go on the title together. It should be noted that co–signers are not the same as co–mortgagors: Co–signers sign the note as guarantors but are not on the title, do not sign the trust deed, and therefore are rarely acceptable to real estate lenders. Co–mortgagors help with income qualifying but will not help to cure bad credit. Lenders include all income and all debts from all parties to qualify fo...
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- Spring '10