So you’re all ready and super excited to buy….you’ve got your pre-approval and your down payment is all set. You expect to be viewing homes every weekend and within the next 4-6 months, you’re pretty sure you’re going to have an accepted offer.
The question is...since you’ve got your down payment all ready to go, where should you put it? The answer is...you need the funds in your account and in an account that will not fluctuate such as your chequing, savings, or GIC account. If you’re investing in the stock market, you need to cash it now!
You’ll be surprised to hear that some clients leave their down payment in stocks while they’re looking for a new home. They let it ride the market and when things are OK, then I suppose it won’t have that big of an impact. However, we just recently went through a recession due to COVID and people who were looking to buy a place had their money in stocks and bitcoin. And with the huge drop in the market, they had to postpone their home buying search because they don’t have their down payment anymore. We also had a client who called us for help and was very desperate for an alternative lender but their funds were STILL in the stock market even AFTER they had an accepted offer!
We understand you want to stay invested and ride the market. When the market goes up, that does work in your favour, but don't risk it. This is because when the market goes down, it drops very quickly, and a lot.
Another thing you want to make sure is that your funds are in your account. There are some people who have it in cash, leave it in their safety deposit box or other safe places, but it needs to be shown and verified by the bank. There are strict anti-money laundering rules and banks need to know exactly where the funds came from in order to qualify as a down payment. So if there are transfers and deposits into your account, ensure you have the paper trail for it!
And that's it! We just talked about where to put your down payment money when you’re ready to buy. Have more questions? Feel free to reach out to us and we'd be happy to help!