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Happy (Paper) Trails To You: How Moving or Hiding Money Can Delay A Closing


ATTENTION Homebuyers and Homeowners:

It's important not to move money around when you are about to purchase a home or are in the process of purchasing a home (yes, that is the same when refinancing your home as well).

Janet Guilbalt put together a solid post of what NOT to do with your money and accounts when you are attempting to buy a home. Even if you are almost done with the transaction, wait until the loan has closed and funded before making any sudden changes to your bank account. Read below for more details.


A weary home buyer showed up in the mortgage office last night, on the eve of her loan funding. She was confused, embarrassed, and bewildered.

She had signed docs the day before, and handed over a cashiers check. But the bank stubbornly refused to fund the loan. Why?

The borrower could not "paper trail" her cashier's check. In other words: the money had come from an account that had not appeared on her credit application.

"Paper trails" are documents that trace the movement of money from one account to the next. And for all of you rolling your eyes and saying "what difference does it make WHERE the money comes from?" I say this:

A lot.

The money must come from an account that appears on the credit application you submitted. Advice to all mortgage applicants: If you are in the mortgage process do not:

  1. Switch banks.
  2. Close accounts.
  3. Move money from one account to another
  4. Fail to disclose accounts on your mortgage application
  5. Spend your cash to close because you can get the money from "somewhere else".

Sure, she had been told not to charge anything on her credit cards or to make any major purchase, but she should also have been told not to tamper with her asset accounts until AFTER the loan closed.

She had emptied her funds out of the big box bank and closed the account. Then she put them into a brand new credit union account. 

But that's not all. To get her cash to close she had transferred the money into the new credit union account from a retirement account that WAS NOT DISCLOSED on her credit application.

Is the loan dead? Of course not. But it is delayed because it must go back through underwriting with the credit union and the retirement account disclosed. She will probably also need to show proof she liquidated the account on the original credit application.

Can you say DELAY???? (The word no one wants to hear when a loan is ready to fund).

The cash to close must LEAD BACK TO AN ACCOUNT THAT IS ON THE CREDIT APPLICATION. As a best practice, leave your cash to close in the same account throughout the loan process.

When you are ready to submit your funds to close, keep all withdrawal slips, deposit slips, wire instructions and make copies of checks.

And that is how to turn your PAPER TRAILS into HAPPY TRAILS.




Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage



The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 3 commentsJohn Cannata • January 17 2010 08:35PM


This is certainly a great post to do a re-post

your friend in Charlottesville Virginia!

Posted by Charles McDonald, REALTOR®, Blogger, Principal Broker®, Owner (Charlottesville Real Estate Solutions) almost 9 years ago

This is certainly a great post to do a re-post

your friend in Charlottesville Virginia!

Posted by Charles McDonald, REALTOR®, Blogger, Principal Broker®, Owner (Charlottesville Real Estate Solutions) almost 9 years ago

John  There is no question you should "cool it" when planning to purchase a home.  I always love it when they plan to buy a home right after they've been to 5 car dealers and added a 52" plasma TV to their credit card

Posted by Karen Kruschka, - "My Experience Isn't Expensive - It's PRICELESS" (RE/MAX Executives) almost 9 years ago