Earnest Money Deposits For Franklin TN Property Purchases

When buying a home, part of the purchase process normally involves earnest money deposits from buyers to assure sellers that they are acting in good faith. Deposits should be submitted in a certain manner so as not to delay the underwriting approval process. This article provides information on earnest money deposits for Franklin TN property purchases.

Source of Funds

It is essential for buyers to use their own money for earnest money deposits (also known as trust money). Many financing programs actually require buyers to use their own money for all expenses related to the transaction. Buyers are typically asked to submit copies of bank statements verifying that the money was pre-existing in their account and that earnest money deposits were taken from that account. Accounts must also display enough balances to cover closing costs and down payments. Lenders will verify all of this during the mortgage underwriting process. Buyers failing to use personal funds may impact their likelihood of receiving a loan.

Gifted Funds

Certain types of loans permit monetary gifts to buyers from their family members. However, buyers should not ask family members to submit earnest money deposits for them. The proper procedure entails a gift letter, copies of bank statements from the family member verifying where the funds came from, and then account statements from the home buyer showing acceptance of the gift. Staying with proper procedures may minimize complications when underwriters process the paperwork.

Getting Ready for Earnest Money Deposits For Franklin TN Property Purchases

Buyers planning on a future property purchase can take a few precautions to prevent delays with their loan approval. First, they should make sure all money saved for earnest money deposits, down payments, and closing expenses remain in their own accounts and may be documented. Keep at least two months of account statements on-hand. The statements should not display any odd transactions (such as significant cash deposits). Lastly, when submitting earnest money deposits for Franklin TN property purchases, buyers should utilize funds from their own accounts. If receiving gift money, ask your mortgage officer for the necessary procedure before accepting those funds. These steps will prevent issues and result in easier mortgage approval.