Mr. Smith: I am 79 years old and I am a man of my word. If I tell you that I have $150,000, then I have $150,000. I will bring the money to the closing.

Ann: Mr. Smith, I have to show the under-writer that you have enough money to complete the purchase.

Mr. Smith: My daughter will be giving the money to me.

Ann: She will need to sign a gift letter and prove source of funds and the transfer of funds.

Mr. Smith: That is utterly ridiculous. My daughter will not give you a copy of her bank statement. That is none of your business. If my daughter wants to give me money, it’s between her and me.

And so it went…

Large deposits are defined as anything over normal pay stub deposits. Sometimes we have to explain deposits as low as $500!

Cash money usually cannot be documented and money coming from employers or congregations also is not acceptable. Before purchasing a home, this is a discussion that you MUST have with your Mortgage Specialist.

A few common mistakes regarding income:

When applying for a mortgage, work a complete week. If you get paid hourly, we will look at your pay-stubs and the verification of employment from your job to calculate your income. Over the Yomim Tovim this is a big problem. Applicants that work in schools or work by the hour suddenly have very short work weeks. It is important to provide paystubs covering a one month period showing a consistent hourly average. Therefore, a savvy mortgage consultant will advise you as to what to do and how to plan your contract dates so that a complete month of complete paystubs can be provided.

Another common mistake is that people start a new job and get paid with a 1099, meaning that the taxes are not taken out. Technically, you are an independent consultant. You need be working two years on a 1099, and have at least one filed tax return to verify the income prior to being able to use ANY of this income.

Just recently, I was asked by a realtor to try to salvage a deal. The client had been in contract for three months and had just gotten turned down. The client gave me his tax return. When I asked for paystubs, he told me he started a new job five months before. When I saw his paystub, I saw that he was being paid with a 1099. I had to tell him that even though he had filed a tax return last year, and he had already made a substantial amount from his new job, that I could not consider ANY of his income for mortgage purposes!

Being a first time homeowner is daunting. Don’t expect the mortgage process to be easy. You must choose a competent mortgage professional to guide you and they must ask you a lot of questions. Only then will you get the guidance that you need to reach the finish line, your closing!

If you have any questions regarding any mortgage issue, contact Ann Zeilingold, Branch Manager of First Meridian Mortgage Corp. Licensed Mortgage Banker NY, NJ, CT, banking departments. 1609 Route 202, Pomona NY 10970. 845-354-9700 or ann@annzeilingold.com or www.annzeilingold.com.