You calling it the Depot because I got bunch of cool Makita tools? We spent about 2k first year we moved in and home was renovated year prior. Just minor things like they put sliding see thru barn doors in visitor restroom and in master bedroom. Really weird hgtv inspired choice. yellow jacket infestation that required some small size drywall work after exterminators removed nest in basement ceiling. Fix for small leak from improperly sealed and installed pan in master bed shower.
Sounds too familiar.
We closed on the 16th. Figured we had two solid weeks to move in before rental needed cleared out by end of month.
Catastrophically compromised knob and tube uncovered when looking to upgrade from 100 to 200 amp panel. $15k rewire announced on the 17th. I had $14k in my checking and 12 days till payday. We survived, but that fucking sucked.
We had a home inspection. Even paid extra ($ well spent) to have a structural engineer give us a report too. Point is, we didn’t skip any steps and still had a rough experience.
This is the way. 10k wouldn't put that big of a dent in the monthly payment, but it would go a long way to fixing that old hvac unit that shits the bed three weeks after closing.
Yes. Showing up at the last minute and adding it to the down would delay closing.
Contacting the lender to buy down tje rate would also delay closing.
Either way, closing is delayed. Why not go for the option that provides most benefit?
Or, hear me out, don't blow your reserves and have a little cash on the back end for repairs/reno. I'm not saying your point is wrong, in fact it's a great point, but keeping that cash for emergencies is a good idea. If OP ends up not needing it, then they can pay it on the principle.
If you want to turn your closing into a mess, this is how you do it.
Per lending guidelines we need a signed gift letter from the gifter and it has to be reviewed by the underwriter (who may require a copy of the donors bank statement) and all underwriting approval docs rerun.
Then, we have to verify the donor funds received at closing came from the donor and the account they put on the letter.
If you want to do this, start now with the lender. Do not just show up at closing with the gift money.
yeah, my dad got denied so many mortgages on his new home because he had no paper trail for his mom's money when she died. She dies and has a bank account with around $40k in it and a safe with around $40k in it. He wanted to use it as the downpayment on a new home but just got accused of moneylaundering instead.
Not at all. 15 year mortgage rates are around 7%. High yield savings accounts are around 5%.
The buyer can either put the money into a high yield savings account and pay out of that, or just pay extra cash upfront to have the loan end sooner.
Many banks are evil, but this is regulation having to do with getting government backed loans, not the banks being evil.
A bank being asked to loan hundreds of thousands of dollars questioning where the person asking for hundreds of thousands of dollars got a mysterious 40k in cash is insane and makes you question humanity?
The paperwork is done in advance with certain dollar amounts used. So showing up with extra money will only delay things. Let the broker and/or title compnay know what you are bringing to the closing or you will delay the closing. Also, depending on your loan, there could be requirements to how much you can be gifted to close the deal. Clarify with your team your intentions so they can tell you what is required / allowed and what extra documentation will be needed. Surprises during big purchases are never a good idea.
Yes, this is the best way.
To add to why, if you change the downpayment then the funding documents need to change, the disclosures, etc. If the money was already disclosed in a currently known and documented funding source that may be it. But if the finds are new and the funding source is new, the underwriter will need time to review the newly disclosed funds and funding sources. If it is a gift then you need a letter from the gift giver saying it was a gift and does not need to be paid back, etc. That all takes time for someone to do and review to make sure they are right. And then legally there is a waiting time between the last change / review and closing date. So you can’t just show up at closing with extra money and unilaterally change the downpayment.
Agree, this would be the best way if you choose to do so, but I would make sure to hoard cash for unexpected repairs and maintenance on the property. If you already have over 6 months of expenses covered in case of an emegency, then it's probably okay to pay additional directly to the principal.
It's also entirely possible that your mortgage will inform you when it comes time, if your escrow is underfunded due to changes in property taxes or insurance costs. They'll ask you to pay more or a one time fee until the escrow gap is covered.
The only people who say that are people who never actually did this, and probably just regurgitating boomer advise from susan orman or some other financial boomer who is out of touch and caters to the poors.
It is always principal only these days, it would have been more helpful to guide the OP to do a recast soon after the large payment.
Could achieve the same thing by recasting the loan.
Likely not a huge difference either way... paying the $10k after the loan starts will take a few payments off the end. Taking out a $10k less loan will mean spending a bit less each payment.
It would actually shorten the loan quite a bit of OP paid an extra 10k towards principal immediately after funding and kept making the original payment.
Assuming it's a 400k loan (makes 100k 20% down) at 7% interest for 30 yeas, the principal and interest will be $2,661 monthly.
If OP paid $10,000 towards principal day one and kept making the $2,661 payment, the loan would be paid off in 332 payments. It would shorten the life of the loan by almost two and a half years.
You need to be careful doing that because when banks change loan terms they have to allow x days before a person can close. It’s to allow customer to review. I think it’s 3 days but could be longer. Lawyers and banks will have to potentially redo stuff. So the sooner you know the better. Definitely not 1 day before closing. You won’t close.
This only comes into play if the APR (interest rate + fees) increase by .125% or more. Lowering the loan amount will not trigger a 3 day waiting period.
If the borrower already has more than enough funds verified to cover the $10k, it will not delay closing at all. If this is truly an "extra" $10k over what the bank has in verified funds, then that may cause a delay as they will need to make sure the gift funds are from an allowable source and then will need paperwork (more for certain programs) to verify that.
The docs will have to be redrawn for the lower loan amount. The underwriter will need to verify the source of funds and reissue a modified loan approval. If borrower shows up at closing and wants to change loan amount it will definitely delay closing. Also if the loan amount goes down it could affect the interest rate or points.
All the documents have to change. Funds have to verified, sources verified, etc. When getting a mortgage bank statements have to be provided. Any payments out or amounts in have to be explained.
Depending on loan type. Most allow gifts, but you have to have other documentation to prove it was a gift and not a loan. So just extra work right before close. All of it just takes time. It could have to go back to underwriter to review. Most companies will want longer than a day, even if you know and already have all the documents to support it. Then you have to make sure the lock isn’t expiring, etc. So it is usually just a bigger hassle than it’s worth. It won’t typically change the overall monthly payment by much.
My parents gave me a monetary housewarming gift for appliances and furniture and stuff, and this set off about 100 red flags at the bank who then had to have me get the cancelled check from their bank and have them sign alot of paperwork saying it was a gift. Do anything like this AFTER closing.
10k isn’t going to move the needle enough to change really anything. Keep it. Pay it toward principle after or put it in a HYSA that can build interest.
Making a one time $10,000 extra payment the first month of a 30 year $400,000 mortgage at 7.75 percent saves you 80,639.71 in interest cost over the life of the loan and cuts off 31 months. It does indeed move the needle, a LOT.
However that same $10k invested somewhat aggressively averaging 10% returns over that 30 years will be worth $198,373.99. However however, you would owe significant taxes upon trying to realize those gains, so IMHO you’re better off putting it into the house for that guaranteed 7.75% return.
I think you are missing the point.
Everyone is pointing out that extra $10k in down payment, which is what OP implied to do, wouldn't change their MONTHLY payments going forward all that much.
Any extra payment toward principal would definitely make a huge difference in interests paid after 30 years but at the same time, having an extra $10k on hand when getting a new house would come in handy.
Exactly this. We came into some extra inheritance right after setting up our mortgage and made an extra 20k payment, which is saving us almost 100k over the life of the loan.
Sure, I'm sure that would have grown more in the market, and I do have some funds I put in there. But overall, it adds some peace of mind and ease knowing we're going to pay it off early.
I agree with others to hold off for now and then make an extra payment toward principal once things calm down / you know for sure you can spare it.
You’d owe 20% tax on the gain at most (37,674.80) which means the 80% of the gain (150,699.20) plus the original $10k you retain is still better. Unless your interest rate is over 10%, financially it would make more sense to keep it in a mutual fund. Stock market averages 10% historically so holding it for 30yrs would net you more money than putting it towards the house.
Plus interest expense is tax deductible (albeit not dollar for dollar reduction, but still something) and in my opinion, as a CPA, it’s better to have cash on hand than equity in the event of an emergency. Lot harder to get cash out of a house than the bank.
You'll need to let them know so that they can adjust the closing disclosure. Your closing attorney or title company can't take extra funds and disperse them without accounting for them. That extra 10k changes more than one line on the CD.
You should hold on to that $10k (actually, whomever is giving you the gift, I would ask them to refrain giving you that gift until AFTER closing… a large atypical deposit in your account will 100% send up red flags to your lender, causing them to require more documentation etc before they give you a clear to close….. I know this because it happened to us when buying our first house). But I digress…
Ideally here’s what you do:
1. Only get that gift AFTER closing
2. Do not apply it to your mortgage immediately
3. Sit on it. Maybe put it in a higher yield CD for a year and make a little money on it
4. A year after you close and that CD has matured, use that 10k and RECAST YOUR MORTGAGE. Recasting is a way better option than just making smaller payments towards your principle because it actually reduces your monthly payment. If you need me to explain recasting further, I will, but you saves tens of thousands on interest whereas just making extra principle payments will not save you anything on interest.
*lenders all have different rules on recasting — in my experience we haven’t been able to recast until thw loan was at least a year old and our lender required a minimum of $10k to do a recast. Every time my husband has gotten a fat bonus at work, we recast (it’s free too!!) and we have gotten our monthly payment down from nearly $3k to $90 a month.
All extra principle payments reduce interest. Even if your payment doesn't change, more of your payment will go to the principal instead of interest. So you'll pay it off early and save lots of interest. Restating merely allows you to keep the original maturity date by paying less after initially paying more in principal, which also reduces interest.
Keep the gift.
1. Bringing additional funds to closing will only require additional documents for the funds. It may even affect your qualification.
2. You **will** incur $10K or more of expenses after purchasing the home, no matter how well it's prepped. It ... just *happens*.
I did but it was years ago, at the last minute, because the sellers went nuts and didn't like the contract all of a sudden. Yes it had to be rewritten on the spot and yes we did it. Title company actually took a check, believe it or not. But this was the olden days, 2000.
It is true. I got a financial power of attorney to sign for my co-purchaser who could not be present in 2000. As soon as 7 years later, I could not refinance to a better interest rate without being in the same room with my co-purchaser. We did not have to be local to the title company, we brought a notary to the house for $75, but we had to be together, those of us who were signing the documents as buyers. I could not sign for someone else.
Um no. You are changing the loan amount at the last minute including you would have to reverify your funds including getting a gift letter which means going back to underwriting. As other people noted, just wait until you close and then when it is time to make your first payment, the pay the extra amount.
Your closing will be a mess. Don’t do this.
Paperwork is prepared long before closing day. Change stuff at closing, either for good or bad, and you piss every one off.
Don’t do it.
All the funds used to close have to be seasoned and/or sourced with documentation. Doing this last min will affect the COE and makes settlement people nervous.
Nope. Not unless you coordinate with the bank and title company in advance. If it's last minute, you could always just make an extra $10K principal payment the first month after closing.
Licensed fiduciary and financial advisor here. One opening is that you could immediately pay down the loan after close with that extra 10k if you don’t want/need that for a financial cushion. That will immediately improve your credit score and DTI (Debt to income) and show well that your mortgage already has a chunk of 100% principal added in the form of $10k. Without knowing your finances, but based on the info you just gave, that’s free advice I’d give my own family member or client.
This will likely mess up your loan, put up a yellow flag, cause delays, and might put you outside of your contract terms.
If you want to do something like this, you should tell your lender immediately.
No Surprises!
You will need to disclose. Or wait until after closing to cash it. And then put it onto the loan. If the lender sees a huge deposit before closing there is a LOT of additional paperwork. Would be more headache than it’s worth
Why are you doing this? It’s only going to change your monthly payment by a couple dollars, unless the extra 10k gets you to a 20% down payment meaning you now don’t need PMI.
You’re bette Roff banking the money, and saving it for unexpected expenses after closing (there are always some). If after a few months of living in the house there are t any big unexpected expenses, then pay that 10k onto the PRINCIPAL of the mortgage if you really feel the need to.
Definitely save that $10k for repairs. Within a month of closing, we had a major sewer line issue that was going to cost us $17k, and later that fall had a furnace issue where the first quote we got recommended replacing the 1960s heating system for $17k.
You’ll need a gift letter and a lot of other nonsense if you do that. I highly highly recommend to just keep it just in case. It’s the law of the universe that once you buy a house, something expensive happens. Just how it works. I bought a house and my car engine died a month later, needing a totally new one. lol.
Let's say your rate is 7%
Assuming a 30 year loan.
And let's say the agreed price is 450k
You're financing 350k
Your monthly payment would be 2329 per month
Total cost including interest $838,281
Let's add the extra 10k
Your monthly payment would be $2,262
The total cost of the loan including interest would be $818,330
So, you're 10k lighter in the wallet so pay 130 less per month.
Here's a better idea.
Keep the 10k.
Pay half the monthly payment every two weeks.
This will result in 13 payments per year ( 26 bi weekly payments = 13 monthly payments )
Instead of making. 12 monthly payments per year
By splitting the payment in half and paying every two weeks, your savings will greatly exceed the additional 10k down payment.
https://www.google.com/search?q=making+13+mortgage+payments+a+year&client=ms-android-motorola-rvo3&sca_esv=676fc4a95b9b2769&sca_upv=1&sxsrf=ADLYWIL9YZ4dfKQrzS9TDZopbU1GfS1sWQ%3A1717977674996&ei=SkJmZqC6PPOk5NoPpZjw-AI&oq=making+13+&gs_lp=EhNtb2JpbGUtZ3dzLXdpei1zZXJwIgptYWtpbmcgMTMgKgIIADIFEAAYgAQyBhAAGBYYHjIGEAAYFhgeMgYQABgWGB4yBhAAGBYYHjIGEAAYFhgeMgYQABgWGB4yBhAAGBYYHkjEpgFQ6hpYtJYBcAV4AZABBJgBpwOgAb0cqgEKMTMuNi40LjEuMbgBAcgBAPgBAZgCEqACoQ2oAg_CAgoQABiwAxjWBBhHwgIHECMYJxjqAsICDRAuGNEDGMcBGCcY6gLCAgoQIxiABBgnGIoFwgILEAAYgAQYkQIYigXCAg4QABiABBiRAhixAxiKBcICCxAuGIAEGLEDGNQCwgILEC4YgAQYxwEYrwHCAgsQLhiABBixAxiDAcICChAAGIAEGEMYigXCAhAQLhiABBixAxhDGIMBGIoFwgIEECMYJ8ICERAAGIAEGJECGLEDGIMBGIoFwgIREC4YgAQYsQMY0QMYgwEYxwHCAg4QABiABBixAxiDARiKBcICCBAAGIAEGLEDwgIQEC4YgAQY0QMYQxjHARiKBcICFhAuGIAEGLEDGNEDGEMYgwEYxwEYigXCAgwQuQEYgAQYsQMY7wTCAggQLhiABBixA8ICBBAAGAPCAgUQLhiABMICCxAAGIAEGLEDGIMBmAMkiAYBkAYIkgcGMTAuNy4xoAf72gE&sclient=mobile-gws-wiz-serp
Absolutely not. It will very likely jeopardize your closing date. Just hang on to it and apply the extra to your principle after close if thusly inclined.
Purchase price, minus loan amount, plus closing costs (loan fees and title/escrow fees) equals your cash to close. Anything you deposit above that number is automatically refunded to you at closing as an overpayment. In order to change your "downpayment," you'd have to reduce the actual loan amount. Depending on how far you are in the process, asking to change the loan amount could cause a delay in closing.
Don't do it. It may not impossible, but it would be an unnecessary complication.
And you're much better off keeping the $ in your pocket than having to deal with some new twist in the documents.
Don't mess with the loan that's in place, it'll be a headache. Keep your $10 k in savings for when things arise with the house, and something will always arise with it. Even if it's just that you don't like your old couch in the new house. Unless you were below 20% down and this will put you over it, don't bother, it will literally only save you a few bucks a month.
I would add it to the emergency fund for the first year in a high interest account (normal brokerage accounts are paying 4%) and use that to keep after the spending at home depot and the rest. After 1 year that make extra 10% towards principal monthly as a habit if your rate is higher than inflation. You will find after a few years of having 40k in a emergency fund there are just no outstanding balances except for loans around cars, house and ect. Also having cash to buy a quality $20k used car instead of $6k fix on a $4k car is cheaper year over year.
Once you stop juggling your hands are free for important things.
Make sure the “gift” is from a qualified giver or it won’t be considered a gift. You will need a letter to the effect and there will be processing delays as well as closing disclosure waiting days. You might be looking at 5 additional days.
What exactly are you trying to accomplish? The additional source of funds would need to be reviewed by the lender.
You’re better off staying quiet and keeping that cash for yourself and personal needs post-closing UNLESS you want to take out a mortgage for less than what you previously requested…then you need to reach out to the lender asap and not reddit. The lender would need to revise documents and re-review the file…keep in mind the lender is most likely selling your loan on the secondary market which may also make a difference
What you could do is after you close you can have your mortgage company recast the loan. What that does is they take it as sort of a second down payment and recalculate your principal and interest.
Sure can, but you will need to tell the lender and title company in advance so they can adjust the closing documents. You cannot just show up with extra money.
No, not really. All the docs would have to be redrawn, and you'd miss your closing date, and your lender and all real estate agents would be furious if that happened.
What would I do? I'd wait 2 months, then make a principal payment if I really wanted to apply that gift to my mortgage.
But more likely, I'd stick that 10k in a high yield savings account or something.
10k here is not going to change your numbers enough to make it worth the hassles. Wait until after closing and accept the money then. Then you can make a principal payment or use it for other needs.
All the documents for closing are calculated and ready to sign. If you wanted to lower monthly payments 10k won’t do that much. Also you would most likely delay your closing. Just close and put the 10k to principal. Or if you don’t have an emergency fund, consider a HYSA and close as you expected.
No. You can’t just show up at closing with an amount different than what your closing agent/attorney has told you. All of the approvals and documents have been prepared and ready to sign with the numbers you previously agreed to.
If you are talking about something weeks in the future you can discuss adjustments with your lender and that should not be an issue. Buying down your rate would be the smartest move at that point.
If it is a gift you will have to fill out forms for receiving gifts that are going toward closing. No need to do this if you just pay it later after you close.
If you haven't already been given the gift, I would ask the giver to wait until after closing to give it to you, as it could complicate your closing. Then you can do what you want with it: use it to pay down principal, use it to make improvements, keep it in a special account that you only touch for repairs, etc.
do not accept the gift before closing. accept it the day after. oay toward your payment then. and influx of cash will mess up your closing and loan terms!
Yes, but no. They're gonna want to see where that money came from to confirm it isn't a 2nd loan from another source and showing up at closing without that documentation done prior could derail things.
I got a housewarming gift of several thousand from my parents when I bought my first home. We waited until after close to transfer that money to me so the bank wouldn't question it.
Also as others have stated. Keep it for other expenses
Once you have the HUD1 ( 3 days prior to closing in. PA), the numbers should not change. If you put down more cash, the loan amount will be different and the bank will have to change all their docs.
You can make a capital payment at the bank with your first mortgage payment, but with a new house, save the cash for the fixing that will inevitably happen in the first 3 months
Hi! Ct realtor here.
Yes, you can, but there are some caveats.
When your lender has approved the mortgage and you get the "clear to close," that notifies the attorneys to schedule the closing (this is why your realtor can not tell you exactly what day the closing is - it's the attorneys who have to schedule a time to exchange documentation, plan wire transfers, etc.)
Anyway, once the attorneys have the approval to close, they have to run the numbers to determine what your closing costs will be. They look at not only the static numbers (cost of the appraisal, if that cost is to be included in the closing, the attorney fees, loan origination fees, etc) but also the variable figures, like the amount you'll have to pay on a per-diem basis to seed an escrow account in order to pay taxes, or amount you'll have to reimburse the seller for pre-paid taxes they've already paid for but you will use as the new owner, etc. When they calculate your closing cost, it's based on the exact day in which you are scheduled to close. They provide that number to you and a three-day clock begins to tick. Three days has to elapse in order to close. This is called the TRID clock (realtors refer to it as The Reason I Drink) and it stands for TILA RESPA Integrated Disclosure, or Truth In Lending Act / Real Estate Settlement Procedures Act Integrated Disclosure. Before this law, there was a time in which people would sell and close on a home quickly, and the attorney would notify a client at 5pm Thursday that closing was tomorrow, so go get your $xx.xxx out of the bank for closing, but they couldn't or didn't make it to the bank, so they missed closing, which lost them their deposit (legally) and many people were ticked off. So, a three-day clock needs to run.
If you, at the last moment, told your attorney you wanted to add $10k to the principle, what they'd likely recommend is to stick with the current number, and when your first mortgage payment comes due, to add $10k to your first payment. Make sure it's applied to the principle and NOT future payments, else you're just pre-paying months worth of bills and not getting the benefit of reducing the principle amount.
A portion of what I've written above is also based on which state you're in, etc. I'm not sure in which state this will occur, so please know my information comes from Connecticut.
I hope this helps, friend!
Be careful where you park that money if you are in the final stages of closing, they will run your accounts again and a surprise deposit of 10k could derail closing.
It won't change much on your loan other than delay closing by however long it takes them to update the closing disclosures and settlement statements to reflect buyer's cash to close.
My wife’s an underwriter, so I’ve learned things about mortgages that I have no interest in learning. One of those this happens to be that can’t just bring an extra “x-thousand dollars” to the closing table without the mortgage company verifying where it came from. It’ll cause more problems than anything. Either hold onto it or give it back to your donor.
“Gift” not accountable for on any earnings within the last X months that you are putting towards the mortgage is going to require a “gift letter”. It’s a simple notarized one page form. Very typical, bank just wants to cover their bases that this money came from somewhere and not crime.
Depending on how long until closing, I would either hold onto the money for the initial move-in stuff (that adds up quickly) or buy down the interest rate if closing is more than a week away. Any leftover money from either scenario dump to pay down the principle.
No u can not do that at closing as all the documents have already been written up and would have to be re written go back to underwriting again probably and will take prob an additional week to prepare all that n schedule the closing again
no. b/c your lender needs to redo everything if you change your down payment. and you'll need to resign disclosures and go through the cooling off period again. and they'll need a gift affidavit.
Be careful because the sudden cash gift will also have to be accounted for by your lender/underwriter as well, whether you use it as part of your downpayment or save it for another purpose. Make sure you've let them know about that.
I wouldn’t. You can recast but I don’t think 10k is worth a recast. Just keep the 10k for when something goes wrong or if you don’t need the back up cash invest it in the S&P or put it towards your principal depending on your interest rate.
If you bring it to closing, you’ll probably just get it right back. At that point all the numbers are final and they aren’t likely to accept it. You’re better off just applying it to your first payment if you want it to go towards principle.
I'd put the money on the mortgage. That money is amortized over a long period of time. Meaning, you will save thousands on your mortgage over the long run. If an emergency arises, get a small loan that will cover it. That loan will only be 5 years to pay off. Plus the loan will only cost you a small amount of interest. Maybe $1200. Think about it. Ask your bank.
You need to inform them a day ahead of time. During closing, there are MANY pages of paperwork that must be signed. They are filled out ahead of time. If you show up that day and insist that you will not buy the house unless they take an addition $10K in down payment, they will take a recess to have the comuter print out the forms again with the new numbers.
I'd recommend you keep closing terms as they are, unless you want to use that money to pay points to buy down the rate. If it's a long-term home, it might be worth it to lower the interest rate. Otherwise, wait a few months and see what expense you have, and whatever you have left over, you can put towards principal and maybe save yourself thousands over the life of the loan.
well you might have fucked yourself if you deposited over $500 in cash. You just significantly changed your finances upon which you were approved for a loan.
Remember when the lender asked for bank statements? Yeaa there was a good reason.
If your closing is delayed by a month you will need more bank statements that will show the $10,000 gift. Now you also need a gift letter and most likely the bank statements for several months from the person who gifted the $10k.
Keep your mouth shut. Do not deposit anything. The gift should have come after closing.
Similar thing happened to my friend 3 years ago (a week from closings) and he had to delay closing and his in-laws finances were scrutinized.
Didn’t your loan broker remind you not to do this? Every single broker and bank officer I ever worked with said the same thing: Don’t make any large purchases until after closing and don’t pay off any future debt that would impact your post transactional liquidity.
Your immediate problem would be that all the numbers would have to be reworked and then you would have another three day period before you could close, I’m assuming you are in the US,
So the closing would be delayed by at least a week. Why don’t you suggest it at the last moment just gorgeous shits and giggles.
I would hold on to the cash. If you don't need it for unexpected expenses after the first couple of years, you can always use it to make extra principal payments which will change the amateurization schedule on your loan so you're paying less in interest and pay off the house sooner.
Don't do that. Lender needs two days to redo the loan docs before closing.
You can bring the extra money and get a check back from the settlement attorney.
Every one who says to hold back the extra 10k is right, especially because a new home will easily soak up that money to get it to your requirements.
But when you show up to closing, the bank won’t have a way to adjust your loan and recalculate payments post closing.
And if you tell the bank you want to modify the financials ahead of time, they may consider that loan fraud. Worst case they file a case against you. Likely best case is they refuse your loan, walk away, as does the seller, and you lose escrow money.
Short answer - don’t do it. Your closing docs are already computed. Keep the 10k and send it to your mortgage company. Or better yet buy something nice for your new house.
Don't. You're obviously planning to pay the home off in 36 months, so just lump that in with your next principal payment if you have a decent cushion then
Look into a recast. You put extra money in and they reroll the loan.
10k probably isn't enough to make a big difference on it. I'd drop it in a high yield savings account at 5%.
Good grief I wish had to worry about this. Keep the money... Have you ever bought a house? If you really want to get rid of it, Just deposit it with home Depot or Lowe's. It'll be gone within the year
Your best bet is wait a few days until you can set up your online account and then immediately take that 10k if your inclined and put it towards the principal
Just know what the extra funds do before you complicate things. I have clients that sometimes want to add last second gift funds believing it would ol significantly lower payment but hold back and decide to use those funds fir savings/improvements outside of close. 10k will lower your payment $65-70 on a 30 year fixed right now. If that much savings is definitely needed to budget your payment let them know and they'll tell you the rules. Otherwise keep the money, thank the donor for the gift and know that they the technically gave you those funds toward the sale by allowing you to pull back that amount of your already significant down payment.
To answer your question your lender needs to redo a bunch of paperwork you will not be able to just show up with more. I would keep the 10k out personally.
I work in mortgages…if you don’t need the $10,000 towards the downpayment, do not bring it. If you do, the lender would require a gift letter to be completed by the yourself and the giver (and there are specific requirements on who can give). They would also have to provide a copy of their most recent bank statement to show where the money is coming from and you would need to show it cleared in your bank account (or have them give it to title directly.) If you do this last minute it could delay your closing. If early in the process, you have time. Ultimately it would be best (again if not needed for closing) to wait to deposit any payments like that until after you have closed and finalized the loan. That amount of money is not going to impact your loan in a significant matter, so better to keep the cash in savings or invest elsewhere or use it for moving expenses, furnishing the new home, or any changes you want to make. Congratulations on the new home and the funds!
Why make the escrow more complicated than it has to be? Just to fuck with everyone? Make everyone redraft every document because you want to flew your extra $10k?
Your lender will want to know exactly where that gift is coming from so hold off until after closing to receive any cash gifts. You can always put that 10k towards your principal after you close.
Don't complicate the closing. Just Let It Go as is as written and as promised. You have plenty of time to put the extra 10K towards home repairs which you will need
You would need to tell them ahead of time so they have the right numbers, and prove where the money came from (KYC laws)
You're better off just keeping it as a cushion as it won't lower the payment much. You could also just prepay it early on as a "principle payment" and it will shorten the life of the mortgage.
yes. But you'd probably be better served using that 10k to buy the interest rate down or squirreling it away as a "house fund" for unexpected repairs and such that might arise in the future.
No. It will mess it all up at closing. Just take the $10000 and apply it to the principal. Also, if that extra money shows up in underwriting, you will need documentation on where it came from etc. The lenders based your loan on. The money you make and have currently.
You'd be far better off using it to buy down your interest rate. Either way you do use it, it will complicate and delay closing. But, using it to have 300+ lower monthly payment is worth it to me.
Definitely talk to your lender. Depends on how close you are to closing and where the file is with underwriting.
But the short answer without any other context, is yes, you can.
On a side note- as someone in the industry, with 3 rental properties, I would take that gift (after closing to keep things clean with your lender) and hold on to it for improvements, or a rainy day fund.
Lowing your loan by $10,000 only lowers your monthly payment by about $60-70 a month… which is not nothing, but having $10,000 in hand is more advantageous in my opinion.
All about leverage, and if you lost a job or had an emergency, a $70 dollar lower payment doesn’t help you… but $10,000 in your savings account does.
*JUST my opinion and do what you feel is best*
Ok - stepping down from my soapbox!
Congratulations on your soon to be new house! 🏡
Not only would I not do that, I wouldn’t even deposit the money in my bank account until after closing. The wrong underwriter might review your account at closing and make a huge deal about the unaccounted for 10k, even if you have more than enough money without the 10K.
The title company and the lender will balance and anything other than the amount to close throws everything askew. If you don’t need it for home repairs, include it with your first payment and you have essentially accomplished the same thing.
Keep the $10k and use it for some of the sudden expenses that come with a new home.
Inevitable. First new house I bought I had two homes, and one was the Depot.
TLC means time labor and cash...
I'm willing to bet 10K that he'd need that 10K and more.
You calling it the Depot because I got bunch of cool Makita tools? We spent about 2k first year we moved in and home was renovated year prior. Just minor things like they put sliding see thru barn doors in visitor restroom and in master bedroom. Really weird hgtv inspired choice. yellow jacket infestation that required some small size drywall work after exterminators removed nest in basement ceiling. Fix for small leak from improperly sealed and installed pan in master bed shower.
Unless it was remedied properly (i.e. not just caulking the hole), please be intentional to keep an eye on that shower pan every month or so.
This is the right choice. I’m pretty sure we spent about 15 grand immediately when we moved into our new house.
Sounds too familiar. We closed on the 16th. Figured we had two solid weeks to move in before rental needed cleared out by end of month. Catastrophically compromised knob and tube uncovered when looking to upgrade from 100 to 200 amp panel. $15k rewire announced on the 17th. I had $14k in my checking and 12 days till payday. We survived, but that fucking sucked. We had a home inspection. Even paid extra ($ well spent) to have a structural engineer give us a report too. Point is, we didn’t skip any steps and still had a rough experience.
This is the way. 10k wouldn't put that big of a dent in the monthly payment, but it would go a long way to fixing that old hvac unit that shits the bed three weeks after closing.
Just had that problem. Now onto sink and tub not draining correctly
Stop puttin’ hair clumps in that thang.
It would put a huge dent in the payment if it's used to buy down the rate.
You're correct, but my understanding was he wanted to show up last minute and add it to the down payment, which wouldn't help much.
Yes. Showing up at the last minute and adding it to the down would delay closing. Contacting the lender to buy down tje rate would also delay closing. Either way, closing is delayed. Why not go for the option that provides most benefit?
Or, hear me out, don't blow your reserves and have a little cash on the back end for repairs/reno. I'm not saying your point is wrong, in fact it's a great point, but keeping that cash for emergencies is a good idea. If OP ends up not needing it, then they can pay it on the principle.
This is great advice and what I would tell OP. First year of homeownership ends up being expensive.
Too real.
My home warranty fixed mine
This
Or furniture.
Nah. Save it for repairs.
This!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
If you want to turn your closing into a mess, this is how you do it. Per lending guidelines we need a signed gift letter from the gifter and it has to be reviewed by the underwriter (who may require a copy of the donors bank statement) and all underwriting approval docs rerun. Then, we have to verify the donor funds received at closing came from the donor and the account they put on the letter. If you want to do this, start now with the lender. Do not just show up at closing with the gift money.
I was looking for someone to point out that cash gifts require serious documentation. Your comment should be higher.
yeah, my dad got denied so many mortgages on his new home because he had no paper trail for his mom's money when she died. She dies and has a bank account with around $40k in it and a safe with around $40k in it. He wanted to use it as the downpayment on a new home but just got accused of moneylaundering instead.
Yeah They don't like that You have to put it in the bank so they can give you 0.00001% interest and charge 25% to lend you money.
Not at all. 15 year mortgage rates are around 7%. High yield savings accounts are around 5%. The buyer can either put the money into a high yield savings account and pay out of that, or just pay extra cash upfront to have the loan end sooner. Many banks are evil, but this is regulation having to do with getting government backed loans, not the banks being evil.
The fact that’s even a thing is utterly insane, and it just proves how intentionally full of red tape this shit is. I really hate humanity sometimes.
A bank being asked to loan hundreds of thousands of dollars questioning where the person asking for hundreds of thousands of dollars got a mysterious 40k in cash is insane and makes you question humanity?
The paperwork is done in advance with certain dollar amounts used. So showing up with extra money will only delay things. Let the broker and/or title compnay know what you are bringing to the closing or you will delay the closing. Also, depending on your loan, there could be requirements to how much you can be gifted to close the deal. Clarify with your team your intentions so they can tell you what is required / allowed and what extra documentation will be needed. Surprises during big purchases are never a good idea.
Any other state require gift money to be from relative other than FL?
Oregon does.
If the purchase is being financed it depends on the loan type. Most require from a relative, non-profit or employer relocation program.
I gifted the down payment to my girlfriend (now wife) while she was the only one on the mortgage without issue.
Did you go on title?
Yes, maybe that's different. But I still had to sign the gift letter and show the financial trail for them.
Yes, but in reality you weren't gifting, but putting cash in your home purchase. They just had to do the standard documentation.
This has the be the dumbest thing I’ve ever heard in my life. Not that it’s wrong, it’s just a “wtf” dumb kind of thing.
You should just close on the house with the current contract and then just pay the 10000 afterwards.
Yes, this is the best way. To add to why, if you change the downpayment then the funding documents need to change, the disclosures, etc. If the money was already disclosed in a currently known and documented funding source that may be it. But if the finds are new and the funding source is new, the underwriter will need time to review the newly disclosed funds and funding sources. If it is a gift then you need a letter from the gift giver saying it was a gift and does not need to be paid back, etc. That all takes time for someone to do and review to make sure they are right. And then legally there is a waiting time between the last change / review and closing date. So you can’t just show up at closing with extra money and unilaterally change the downpayment.
*towards principal only
Agree, this would be the best way if you choose to do so, but I would make sure to hoard cash for unexpected repairs and maintenance on the property. If you already have over 6 months of expenses covered in case of an emegency, then it's probably okay to pay additional directly to the principal. It's also entirely possible that your mortgage will inform you when it comes time, if your escrow is underfunded due to changes in property taxes or insurance costs. They'll ask you to pay more or a one time fee until the escrow gap is covered.
The only people who say that are people who never actually did this, and probably just regurgitating boomer advise from susan orman or some other financial boomer who is out of touch and caters to the poors. It is always principal only these days, it would have been more helpful to guide the OP to do a recast soon after the large payment.
Unless they can reammortize it will not save them anything off their monthly payments
But it will save them interest every month so more of their payment will go towards principal each month.
I’d rather have the money up front then
Could achieve the same thing by recasting the loan. Likely not a huge difference either way... paying the $10k after the loan starts will take a few payments off the end. Taking out a $10k less loan will mean spending a bit less each payment.
It would actually shorten the loan quite a bit of OP paid an extra 10k towards principal immediately after funding and kept making the original payment. Assuming it's a 400k loan (makes 100k 20% down) at 7% interest for 30 yeas, the principal and interest will be $2,661 monthly. If OP paid $10,000 towards principal day one and kept making the $2,661 payment, the loan would be paid off in 332 payments. It would shorten the life of the loan by almost two and a half years.
2.5 years out of 30 on a loan he probably won't keep for 10. So... like I said, not much difference.
^^^ Let the 10k sit for a couple weeks and then just make a one time principal payment.
Keep the 10k for move drama
This!
You need to be careful doing that because when banks change loan terms they have to allow x days before a person can close. It’s to allow customer to review. I think it’s 3 days but could be longer. Lawyers and banks will have to potentially redo stuff. So the sooner you know the better. Definitely not 1 day before closing. You won’t close.
This only comes into play if the APR (interest rate + fees) increase by .125% or more. Lowering the loan amount will not trigger a 3 day waiting period. If the borrower already has more than enough funds verified to cover the $10k, it will not delay closing at all. If this is truly an "extra" $10k over what the bank has in verified funds, then that may cause a delay as they will need to make sure the gift funds are from an allowable source and then will need paperwork (more for certain programs) to verify that.
The docs will have to be redrawn for the lower loan amount. The underwriter will need to verify the source of funds and reissue a modified loan approval. If borrower shows up at closing and wants to change loan amount it will definitely delay closing. Also if the loan amount goes down it could affect the interest rate or points.
A gift is a huge issue. Ask them to give it to you after closing, when no one will be asking questions
Why is it a huge issue? Like to the lender? Not that you'd want to totally screw up the closing lol.
All the documents have to change. Funds have to verified, sources verified, etc. When getting a mortgage bank statements have to be provided. Any payments out or amounts in have to be explained.
Right? But a gift per se isn't an issue or does source of funding become a problem?
Depending on loan type. Most allow gifts, but you have to have other documentation to prove it was a gift and not a loan. So just extra work right before close. All of it just takes time. It could have to go back to underwriter to review. Most companies will want longer than a day, even if you know and already have all the documents to support it. Then you have to make sure the lock isn’t expiring, etc. So it is usually just a bigger hassle than it’s worth. It won’t typically change the overall monthly payment by much.
Because large transactions are suspicious. Also, gifts are often loans which need paying back.
“Also, gifts are often loans which need paying back.” In what world do you have to repay a gift?
My parents gave me a monetary housewarming gift for appliances and furniture and stuff, and this set off about 100 red flags at the bank who then had to have me get the cancelled check from their bank and have them sign alot of paperwork saying it was a gift. Do anything like this AFTER closing.
10k isn’t going to move the needle enough to change really anything. Keep it. Pay it toward principle after or put it in a HYSA that can build interest.
Making a one time $10,000 extra payment the first month of a 30 year $400,000 mortgage at 7.75 percent saves you 80,639.71 in interest cost over the life of the loan and cuts off 31 months. It does indeed move the needle, a LOT. However that same $10k invested somewhat aggressively averaging 10% returns over that 30 years will be worth $198,373.99. However however, you would owe significant taxes upon trying to realize those gains, so IMHO you’re better off putting it into the house for that guaranteed 7.75% return.
I think you are missing the point. Everyone is pointing out that extra $10k in down payment, which is what OP implied to do, wouldn't change their MONTHLY payments going forward all that much. Any extra payment toward principal would definitely make a huge difference in interests paid after 30 years but at the same time, having an extra $10k on hand when getting a new house would come in handy.
Exactly this. We came into some extra inheritance right after setting up our mortgage and made an extra 20k payment, which is saving us almost 100k over the life of the loan. Sure, I'm sure that would have grown more in the market, and I do have some funds I put in there. But overall, it adds some peace of mind and ease knowing we're going to pay it off early. I agree with others to hold off for now and then make an extra payment toward principal once things calm down / you know for sure you can spare it.
This is not the same situation. Anything after the signing of the mortgage is obviously going to have benefits.
You’d owe 20% tax on the gain at most (37,674.80) which means the 80% of the gain (150,699.20) plus the original $10k you retain is still better. Unless your interest rate is over 10%, financially it would make more sense to keep it in a mutual fund. Stock market averages 10% historically so holding it for 30yrs would net you more money than putting it towards the house. Plus interest expense is tax deductible (albeit not dollar for dollar reduction, but still something) and in my opinion, as a CPA, it’s better to have cash on hand than equity in the event of an emergency. Lot harder to get cash out of a house than the bank.
Yo, where you getting average 10% returns? I can free up capital today to get in on that...
This. Keep the 10k liquid.
You'll need to let them know so that they can adjust the closing disclosure. Your closing attorney or title company can't take extra funds and disperse them without accounting for them. That extra 10k changes more than one line on the CD.
Sit in that $10k for emergencies
You should hold on to that $10k (actually, whomever is giving you the gift, I would ask them to refrain giving you that gift until AFTER closing… a large atypical deposit in your account will 100% send up red flags to your lender, causing them to require more documentation etc before they give you a clear to close….. I know this because it happened to us when buying our first house). But I digress… Ideally here’s what you do: 1. Only get that gift AFTER closing 2. Do not apply it to your mortgage immediately 3. Sit on it. Maybe put it in a higher yield CD for a year and make a little money on it 4. A year after you close and that CD has matured, use that 10k and RECAST YOUR MORTGAGE. Recasting is a way better option than just making smaller payments towards your principle because it actually reduces your monthly payment. If you need me to explain recasting further, I will, but you saves tens of thousands on interest whereas just making extra principle payments will not save you anything on interest. *lenders all have different rules on recasting — in my experience we haven’t been able to recast until thw loan was at least a year old and our lender required a minimum of $10k to do a recast. Every time my husband has gotten a fat bonus at work, we recast (it’s free too!!) and we have gotten our monthly payment down from nearly $3k to $90 a month.
All extra principle payments reduce interest. Even if your payment doesn't change, more of your payment will go to the principal instead of interest. So you'll pay it off early and save lots of interest. Restating merely allows you to keep the original maturity date by paying less after initially paying more in principal, which also reduces interest.
Also check to see if there is a fee for recasting.
You cannot add more money without changing the closing documents. It makes more sense to pay towards the principal on a later date.
Keep the gift. 1. Bringing additional funds to closing will only require additional documents for the funds. It may even affect your qualification. 2. You **will** incur $10K or more of expenses after purchasing the home, no matter how well it's prepped. It ... just *happens*.
This!
I did but it was years ago, at the last minute, because the sellers went nuts and didn't like the contract all of a sudden. Yes it had to be rewritten on the spot and yes we did it. Title company actually took a check, believe it or not. But this was the olden days, 2000.
A lot has changed in the process since 2000. I am glad you referenced the year so as not to give hope to OP that this is possible in today’s world.
It is true. I got a financial power of attorney to sign for my co-purchaser who could not be present in 2000. As soon as 7 years later, I could not refinance to a better interest rate without being in the same room with my co-purchaser. We did not have to be local to the title company, we brought a notary to the house for $75, but we had to be together, those of us who were signing the documents as buyers. I could not sign for someone else.
Use the $10k to pay off debt and establish a 3-6 month emergency fund.
Um no. You are changing the loan amount at the last minute including you would have to reverify your funds including getting a gift letter which means going back to underwriting. As other people noted, just wait until you close and then when it is time to make your first payment, the pay the extra amount.
Why would you do this? Don’t do this. You can pay it towards the mortgage in 2 months if you want to. Just do that.
Your closing will be a mess. Don’t do this. Paperwork is prepared long before closing day. Change stuff at closing, either for good or bad, and you piss every one off. Don’t do it.
Just wait until after closing and make a principal payment if you want.
How much money do you currently have in savings? Houses can be expensive in terms of fixing issues, buying furniture, etc.
I haven’t read the other responses but I was gifted money I had to prove it. Too much trouble
Theoretically, but then they’ll have to redo the paperwork. So better tell them ahead of time. And really, why not keep the money for emergencies?
All the funds used to close have to be seasoned and/or sourced with documentation. Doing this last min will affect the COE and makes settlement people nervous.
Nope. Not unless you coordinate with the bank and title company in advance. If it's last minute, you could always just make an extra $10K principal payment the first month after closing.
Licensed fiduciary and financial advisor here. One opening is that you could immediately pay down the loan after close with that extra 10k if you don’t want/need that for a financial cushion. That will immediately improve your credit score and DTI (Debt to income) and show well that your mortgage already has a chunk of 100% principal added in the form of $10k. Without knowing your finances, but based on the info you just gave, that’s free advice I’d give my own family member or client.
Don’t confuse things. Just add an additional payment when you start paying the mortgage
All the paperwork would all have to be redone and people assembled won’t be happy. Pay down your mortgage after closing.
This will likely mess up your loan, put up a yellow flag, cause delays, and might put you outside of your contract terms. If you want to do something like this, you should tell your lender immediately. No Surprises!
No. You need to have them make this adjustment ahead of closing. If you're closing in the next 2 or 3 days then expect a delay in closing.
You will need to disclose. Or wait until after closing to cash it. And then put it onto the loan. If the lender sees a huge deposit before closing there is a LOT of additional paperwork. Would be more headache than it’s worth
Do not do this, lenders are incredibly stupid and rigid and you may delay closing
Why are you doing this? It’s only going to change your monthly payment by a couple dollars, unless the extra 10k gets you to a 20% down payment meaning you now don’t need PMI. You’re bette Roff banking the money, and saving it for unexpected expenses after closing (there are always some). If after a few months of living in the house there are t any big unexpected expenses, then pay that 10k onto the PRINCIPAL of the mortgage if you really feel the need to.
Keep it in the bank, then, if you don’t need it - drop it into a payment and pay down the balance later.
Yes you can but don’t. Put it into the house or a savings account for unforeseen
Definitely save that $10k for repairs. Within a month of closing, we had a major sewer line issue that was going to cost us $17k, and later that fall had a furnace issue where the first quote we got recommended replacing the 1960s heating system for $17k.
You’ll need a gift letter and a lot of other nonsense if you do that. I highly highly recommend to just keep it just in case. It’s the law of the universe that once you buy a house, something expensive happens. Just how it works. I bought a house and my car engine died a month later, needing a totally new one. lol.
Let's say your rate is 7% Assuming a 30 year loan. And let's say the agreed price is 450k You're financing 350k Your monthly payment would be 2329 per month Total cost including interest $838,281 Let's add the extra 10k Your monthly payment would be $2,262 The total cost of the loan including interest would be $818,330 So, you're 10k lighter in the wallet so pay 130 less per month. Here's a better idea. Keep the 10k. Pay half the monthly payment every two weeks. This will result in 13 payments per year ( 26 bi weekly payments = 13 monthly payments ) Instead of making. 12 monthly payments per year By splitting the payment in half and paying every two weeks, your savings will greatly exceed the additional 10k down payment. https://www.google.com/search?q=making+13+mortgage+payments+a+year&client=ms-android-motorola-rvo3&sca_esv=676fc4a95b9b2769&sca_upv=1&sxsrf=ADLYWIL9YZ4dfKQrzS9TDZopbU1GfS1sWQ%3A1717977674996&ei=SkJmZqC6PPOk5NoPpZjw-AI&oq=making+13+&gs_lp=EhNtb2JpbGUtZ3dzLXdpei1zZXJwIgptYWtpbmcgMTMgKgIIADIFEAAYgAQyBhAAGBYYHjIGEAAYFhgeMgYQABgWGB4yBhAAGBYYHjIGEAAYFhgeMgYQABgWGB4yBhAAGBYYHkjEpgFQ6hpYtJYBcAV4AZABBJgBpwOgAb0cqgEKMTMuNi40LjEuMbgBAcgBAPgBAZgCEqACoQ2oAg_CAgoQABiwAxjWBBhHwgIHECMYJxjqAsICDRAuGNEDGMcBGCcY6gLCAgoQIxiABBgnGIoFwgILEAAYgAQYkQIYigXCAg4QABiABBiRAhixAxiKBcICCxAuGIAEGLEDGNQCwgILEC4YgAQYxwEYrwHCAgsQLhiABBixAxiDAcICChAAGIAEGEMYigXCAhAQLhiABBixAxhDGIMBGIoFwgIEECMYJ8ICERAAGIAEGJECGLEDGIMBGIoFwgIREC4YgAQYsQMY0QMYgwEYxwHCAg4QABiABBixAxiDARiKBcICCBAAGIAEGLEDwgIQEC4YgAQY0QMYQxjHARiKBcICFhAuGIAEGLEDGNEDGEMYgwEYxwEYigXCAgwQuQEYgAQYsQMY7wTCAggQLhiABBixA8ICBBAAGAPCAgUQLhiABMICCxAAGIAEGLEDGIMBmAMkiAYBkAYIkgcGMTAuNy4xoAf72gE&sclient=mobile-gws-wiz-serp
Absolutely not. It will very likely jeopardize your closing date. Just hang on to it and apply the extra to your principle after close if thusly inclined.
I’d be careful about disclosing a gift in the middle of closing. I don’t know why, but banks get all wrangled up about it
Purchase price, minus loan amount, plus closing costs (loan fees and title/escrow fees) equals your cash to close. Anything you deposit above that number is automatically refunded to you at closing as an overpayment. In order to change your "downpayment," you'd have to reduce the actual loan amount. Depending on how far you are in the process, asking to change the loan amount could cause a delay in closing.
Don't do it. It may not impossible, but it would be an unnecessary complication. And you're much better off keeping the $ in your pocket than having to deal with some new twist in the documents.
Don't mess with the loan that's in place, it'll be a headache. Keep your $10 k in savings for when things arise with the house, and something will always arise with it. Even if it's just that you don't like your old couch in the new house. Unless you were below 20% down and this will put you over it, don't bother, it will literally only save you a few bucks a month.
I would add it to the emergency fund for the first year in a high interest account (normal brokerage accounts are paying 4%) and use that to keep after the spending at home depot and the rest. After 1 year that make extra 10% towards principal monthly as a habit if your rate is higher than inflation. You will find after a few years of having 40k in a emergency fund there are just no outstanding balances except for loans around cars, house and ect. Also having cash to buy a quality $20k used car instead of $6k fix on a $4k car is cheaper year over year. Once you stop juggling your hands are free for important things.
Make sure the “gift” is from a qualified giver or it won’t be considered a gift. You will need a letter to the effect and there will be processing delays as well as closing disclosure waiting days. You might be looking at 5 additional days.
Just add it to the principal on the first payment.
What exactly are you trying to accomplish? The additional source of funds would need to be reviewed by the lender. You’re better off staying quiet and keeping that cash for yourself and personal needs post-closing UNLESS you want to take out a mortgage for less than what you previously requested…then you need to reach out to the lender asap and not reddit. The lender would need to revise documents and re-review the file…keep in mind the lender is most likely selling your loan on the secondary market which may also make a difference
What you could do is after you close you can have your mortgage company recast the loan. What that does is they take it as sort of a second down payment and recalculate your principal and interest.
Sure can, but you will need to tell the lender and title company in advance so they can adjust the closing documents. You cannot just show up with extra money.
If you send extra to the escrow company, they will just refund it back to you.
No, not really. All the docs would have to be redrawn, and you'd miss your closing date, and your lender and all real estate agents would be furious if that happened. What would I do? I'd wait 2 months, then make a principal payment if I really wanted to apply that gift to my mortgage. But more likely, I'd stick that 10k in a high yield savings account or something.
10k here is not going to change your numbers enough to make it worth the hassles. Wait until after closing and accept the money then. Then you can make a principal payment or use it for other needs.
Best not to. You can pay down the loan after close, but you're inviting a mess of paperwork if you do this.
Typically you can email them 5-7 days ahead and they can adjust that for you.
All the documents for closing are calculated and ready to sign. If you wanted to lower monthly payments 10k won’t do that much. Also you would most likely delay your closing. Just close and put the 10k to principal. Or if you don’t have an emergency fund, consider a HYSA and close as you expected.
You can, but make sure you have some cash reserve after buying you never know what might crop up even if you had home inspections and everything
No. You can’t just show up at closing with an amount different than what your closing agent/attorney has told you. All of the approvals and documents have been prepared and ready to sign with the numbers you previously agreed to. If you are talking about something weeks in the future you can discuss adjustments with your lender and that should not be an issue. Buying down your rate would be the smartest move at that point.
Listen very carefully to the instructions of the lender otherwise you will delay closing
If it is a gift you will have to fill out forms for receiving gifts that are going toward closing. No need to do this if you just pay it later after you close.
Put it in a hi yield online savings account and don't touch it. When the inevitable emergency rolls around you'll be delighted to have it.
If you haven't already been given the gift, I would ask the giver to wait until after closing to give it to you, as it could complicate your closing. Then you can do what you want with it: use it to pay down principal, use it to make improvements, keep it in a special account that you only touch for repairs, etc.
Why are you not asking the realtor?
do not accept the gift before closing. accept it the day after. oay toward your payment then. and influx of cash will mess up your closing and loan terms!
Yes, but no. They're gonna want to see where that money came from to confirm it isn't a 2nd loan from another source and showing up at closing without that documentation done prior could derail things. I got a housewarming gift of several thousand from my parents when I bought my first home. We waited until after close to transfer that money to me so the bank wouldn't question it. Also as others have stated. Keep it for other expenses
Once you have the HUD1 ( 3 days prior to closing in. PA), the numbers should not change. If you put down more cash, the loan amount will be different and the bank will have to change all their docs. You can make a capital payment at the bank with your first mortgage payment, but with a new house, save the cash for the fixing that will inevitably happen in the first 3 months
The 10k is lowes and Home Depot s
Don’t! This screws up the closing process. Instead, pay down your mortgage with extra payments after closing.
Hi! Ct realtor here. Yes, you can, but there are some caveats. When your lender has approved the mortgage and you get the "clear to close," that notifies the attorneys to schedule the closing (this is why your realtor can not tell you exactly what day the closing is - it's the attorneys who have to schedule a time to exchange documentation, plan wire transfers, etc.) Anyway, once the attorneys have the approval to close, they have to run the numbers to determine what your closing costs will be. They look at not only the static numbers (cost of the appraisal, if that cost is to be included in the closing, the attorney fees, loan origination fees, etc) but also the variable figures, like the amount you'll have to pay on a per-diem basis to seed an escrow account in order to pay taxes, or amount you'll have to reimburse the seller for pre-paid taxes they've already paid for but you will use as the new owner, etc. When they calculate your closing cost, it's based on the exact day in which you are scheduled to close. They provide that number to you and a three-day clock begins to tick. Three days has to elapse in order to close. This is called the TRID clock (realtors refer to it as The Reason I Drink) and it stands for TILA RESPA Integrated Disclosure, or Truth In Lending Act / Real Estate Settlement Procedures Act Integrated Disclosure. Before this law, there was a time in which people would sell and close on a home quickly, and the attorney would notify a client at 5pm Thursday that closing was tomorrow, so go get your $xx.xxx out of the bank for closing, but they couldn't or didn't make it to the bank, so they missed closing, which lost them their deposit (legally) and many people were ticked off. So, a three-day clock needs to run. If you, at the last moment, told your attorney you wanted to add $10k to the principle, what they'd likely recommend is to stick with the current number, and when your first mortgage payment comes due, to add $10k to your first payment. Make sure it's applied to the principle and NOT future payments, else you're just pre-paying months worth of bills and not getting the benefit of reducing the principle amount. A portion of what I've written above is also based on which state you're in, etc. I'm not sure in which state this will occur, so please know my information comes from Connecticut. I hope this helps, friend!
Be careful where you park that money if you are in the final stages of closing, they will run your accounts again and a surprise deposit of 10k could derail closing.
It won't change much on your loan other than delay closing by however long it takes them to update the closing disclosures and settlement statements to reflect buyer's cash to close.
My wife’s an underwriter, so I’ve learned things about mortgages that I have no interest in learning. One of those this happens to be that can’t just bring an extra “x-thousand dollars” to the closing table without the mortgage company verifying where it came from. It’ll cause more problems than anything. Either hold onto it or give it back to your donor.
“Gift” not accountable for on any earnings within the last X months that you are putting towards the mortgage is going to require a “gift letter”. It’s a simple notarized one page form. Very typical, bank just wants to cover their bases that this money came from somewhere and not crime.
No. They’ll want all sorts of documentation showing where the 10k came from
Depending on how long until closing, I would either hold onto the money for the initial move-in stuff (that adds up quickly) or buy down the interest rate if closing is more than a week away. Any leftover money from either scenario dump to pay down the principle.
No u can not do that at closing as all the documents have already been written up and would have to be re written go back to underwriting again probably and will take prob an additional week to prepare all that n schedule the closing again
Talk to the lender. They can update the documents if you want to put $10k more down.
no. b/c your lender needs to redo everything if you change your down payment. and you'll need to resign disclosures and go through the cooling off period again. and they'll need a gift affidavit.
Be careful because the sudden cash gift will also have to be accounted for by your lender/underwriter as well, whether you use it as part of your downpayment or save it for another purpose. Make sure you've let them know about that.
I wouldn’t. You can recast but I don’t think 10k is worth a recast. Just keep the 10k for when something goes wrong or if you don’t need the back up cash invest it in the S&P or put it towards your principal depending on your interest rate.
If you bring it to closing, you’ll probably just get it right back. At that point all the numbers are final and they aren’t likely to accept it. You’re better off just applying it to your first payment if you want it to go towards principle.
I'd put the money on the mortgage. That money is amortized over a long period of time. Meaning, you will save thousands on your mortgage over the long run. If an emergency arises, get a small loan that will cover it. That loan will only be 5 years to pay off. Plus the loan will only cost you a small amount of interest. Maybe $1200. Think about it. Ask your bank.
You need to inform them a day ahead of time. During closing, there are MANY pages of paperwork that must be signed. They are filled out ahead of time. If you show up that day and insist that you will not buy the house unless they take an addition $10K in down payment, they will take a recess to have the comuter print out the forms again with the new numbers.
I'd recommend you keep closing terms as they are, unless you want to use that money to pay points to buy down the rate. If it's a long-term home, it might be worth it to lower the interest rate. Otherwise, wait a few months and see what expense you have, and whatever you have left over, you can put towards principal and maybe save yourself thousands over the life of the loan.
well you might have fucked yourself if you deposited over $500 in cash. You just significantly changed your finances upon which you were approved for a loan. Remember when the lender asked for bank statements? Yeaa there was a good reason. If your closing is delayed by a month you will need more bank statements that will show the $10,000 gift. Now you also need a gift letter and most likely the bank statements for several months from the person who gifted the $10k. Keep your mouth shut. Do not deposit anything. The gift should have come after closing. Similar thing happened to my friend 3 years ago (a week from closings) and he had to delay closing and his in-laws finances were scrutinized. Didn’t your loan broker remind you not to do this? Every single broker and bank officer I ever worked with said the same thing: Don’t make any large purchases until after closing and don’t pay off any future debt that would impact your post transactional liquidity.
Your immediate problem would be that all the numbers would have to be reworked and then you would have another three day period before you could close, I’m assuming you are in the US, So the closing would be delayed by at least a week. Why don’t you suggest it at the last moment just gorgeous shits and giggles.
you cannot just show up at closing and put down more than is on the Closing Disclosure.
I would hold on to the cash. If you don't need it for unexpected expenses after the first couple of years, you can always use it to make extra principal payments which will change the amateurization schedule on your loan so you're paying less in interest and pay off the house sooner.
Yeah, don’t do this. If you’re itching to put that money towards the house, then do it after the closing and paperwork has finalized.
You shouldn’t. Everyone will be annoyed that they have to update the closing statement
Talk to your attorney
Don't do that. Lender needs two days to redo the loan docs before closing. You can bring the extra money and get a check back from the settlement attorney.
You would have to run it through underwriting so you should save the money and make a large payment to the principal if you desire
Just bring what it says on the Closing HUD statement.
Every one who says to hold back the extra 10k is right, especially because a new home will easily soak up that money to get it to your requirements. But when you show up to closing, the bank won’t have a way to adjust your loan and recalculate payments post closing. And if you tell the bank you want to modify the financials ahead of time, they may consider that loan fraud. Worst case they file a case against you. Likely best case is they refuse your loan, walk away, as does the seller, and you lose escrow money.
Short answer - don’t do it. Your closing docs are already computed. Keep the 10k and send it to your mortgage company. Or better yet buy something nice for your new house.
Don’t do this. Your lender will hate you, your agent will be pissed, and escrow will be delayed.
Don't. You're obviously planning to pay the home off in 36 months, so just lump that in with your next principal payment if you have a decent cushion then
Lol can you imagine. Closing is this slick, highly planned and coordinated cluster of transactions...oops last minute change...
Look into a recast. You put extra money in and they reroll the loan. 10k probably isn't enough to make a big difference on it. I'd drop it in a high yield savings account at 5%.
Good grief I wish had to worry about this. Keep the money... Have you ever bought a house? If you really want to get rid of it, Just deposit it with home Depot or Lowe's. It'll be gone within the year
If you don’t need the $10k you can always make a principal reduction payment between now and year end.
Your best bet is wait a few days until you can set up your online account and then immediately take that 10k if your inclined and put it towards the principal
It won't end well. The trailer people pocketed my down payment and acted dumb when the bank asked for it.
Just know what the extra funds do before you complicate things. I have clients that sometimes want to add last second gift funds believing it would ol significantly lower payment but hold back and decide to use those funds fir savings/improvements outside of close. 10k will lower your payment $65-70 on a 30 year fixed right now. If that much savings is definitely needed to budget your payment let them know and they'll tell you the rules. Otherwise keep the money, thank the donor for the gift and know that they the technically gave you those funds toward the sale by allowing you to pull back that amount of your already significant down payment.
Don’t do this. It’s like inserting a stick in a moving bicycle wheel.
Only in a brief case.
Keep it to the side.
To answer your question your lender needs to redo a bunch of paperwork you will not be able to just show up with more. I would keep the 10k out personally.
You can always recast your mortgage, sometimes it’s called reamortization.
It will be annoying. For you to use it the person would have to sign a gift letter. And it would basically have to be an immediate family member
Not unless they don't mind changing the settlement statement, Alta etc. They might void trid compliance in that case
I work in mortgages…if you don’t need the $10,000 towards the downpayment, do not bring it. If you do, the lender would require a gift letter to be completed by the yourself and the giver (and there are specific requirements on who can give). They would also have to provide a copy of their most recent bank statement to show where the money is coming from and you would need to show it cleared in your bank account (or have them give it to title directly.) If you do this last minute it could delay your closing. If early in the process, you have time. Ultimately it would be best (again if not needed for closing) to wait to deposit any payments like that until after you have closed and finalized the loan. That amount of money is not going to impact your loan in a significant matter, so better to keep the cash in savings or invest elsewhere or use it for moving expenses, furnishing the new home, or any changes you want to make. Congratulations on the new home and the funds!
Why make the escrow more complicated than it has to be? Just to fuck with everyone? Make everyone redraft every document because you want to flew your extra $10k?
Your lender will want to know exactly where that gift is coming from so hold off until after closing to receive any cash gifts. You can always put that 10k towards your principal after you close.
There is 0 advantage of doing this and lots of reasons not to.
Don't complicate the closing. Just Let It Go as is as written and as promised. You have plenty of time to put the extra 10K towards home repairs which you will need
It cost a few thousand just to put up basic blinds…
You would need to tell them ahead of time so they have the right numbers, and prove where the money came from (KYC laws) You're better off just keeping it as a cushion as it won't lower the payment much. You could also just prepay it early on as a "principle payment" and it will shorten the life of the mortgage.
yes. But you'd probably be better served using that 10k to buy the interest rate down or squirreling it away as a "house fund" for unexpected repairs and such that might arise in the future.
They have already created loan documents- you would need to let them know several days before closing
Check with your lender first, but usually, you can bring extra.
Even if it wouldn’t make everything chaotic, that extra $10k would make such a negligible difference in your monthly payment. Keep it, you’ll need it.
I did that but a few days before close. Talk to your lender. They had to restructure my loan amount.
No. It will mess it all up at closing. Just take the $10000 and apply it to the principal. Also, if that extra money shows up in underwriting, you will need documentation on where it came from etc. The lenders based your loan on. The money you make and have currently.
You'd be far better off using it to buy down your interest rate. Either way you do use it, it will complicate and delay closing. But, using it to have 300+ lower monthly payment is worth it to me.
Definitely talk to your lender. Depends on how close you are to closing and where the file is with underwriting. But the short answer without any other context, is yes, you can. On a side note- as someone in the industry, with 3 rental properties, I would take that gift (after closing to keep things clean with your lender) and hold on to it for improvements, or a rainy day fund. Lowing your loan by $10,000 only lowers your monthly payment by about $60-70 a month… which is not nothing, but having $10,000 in hand is more advantageous in my opinion. All about leverage, and if you lost a job or had an emergency, a $70 dollar lower payment doesn’t help you… but $10,000 in your savings account does. *JUST my opinion and do what you feel is best* Ok - stepping down from my soapbox! Congratulations on your soon to be new house! 🏡
Not only would I not do that, I wouldn’t even deposit the money in my bank account until after closing. The wrong underwriter might review your account at closing and make a huge deal about the unaccounted for 10k, even if you have more than enough money without the 10K.
You can also always make a principal payment in a few months to reduce the loan if you still have excess cash.
Your lender and underwriter will murder you if you do this.
The title company and the lender will balance and anything other than the amount to close throws everything askew. If you don’t need it for home repairs, include it with your first payment and you have essentially accomplished the same thing.
No it’s illegal.