Trying to buy a house? Keep personal data off financial statements – The Orange County Register
If you’re trying to buy a house today, you know the importance of having a current pre-approval letter from a direct lender, if you are planning to take out a home loan.
What you also need to have handy is a bank statement or other type of financial statement that shows you have the money to cover the initial deposit, the remainder of the down payment, and the closing costs.
If you are planning to buy a house with cash, you need to show that you have the money to cover the entire amount of the purchase price, with a little bit more to cover the closing costs.
This is called the proof of funds. Here are some important things to keep in mind when you provide your proof of funds.
1. Take off your account numbers from the statements you provide. You want to protect your personal account information by using a black Sharpie to coverthe number before you scan in your statement. Or use a PDF editor to erase the account number before you email it to your agent.
2. If you have the money spread across multiple accounts, after you take off the account numbers, make sure the sum of all the different balances is enough to cover the amount you need.
Better yet, go one step further and put together a spread sheet of all the accounts by the type (not by account number) and add them all up. Make it easy for the seller, who will be checking, to see that you have all the money you need.
3. If some of the money you need is coming from a gift from your parents, grandparents or other family member, make sure you can provide the amount and the source of the funds.
A letter is usually a good idea to document how much of the money will be gift funds. And you will want to include a bank statement from your generous relative showing they have the money to give to you. Take off their account numbers before you scan or email it. Definitely review this source of funds with your lender.
4. Try not to give away too much with your proof of funds. You are certainly not required to show accounts balances for more than what you need, even though you may have it. It is best to show only what you need to have.
If you are drawing on funds from an account that has significantly more money than you need, it may cause the seller to question why your offer was lower than the list price for the house.
This might be the time for you and your agent to go back over the comps for the house in an effort to keep the sellers eyes on the market value of his house and not your deep pockets.