How Do Underwriters View Funds In Bank Statements?
All funds in bank statements that is newer than 60 days needs to be sourced in order for the mortgage loan underwriter to be able to use towards the down payment and closing costs on a home purchase. Any irregular deposits over $200 needs to be sourced. A mortgage loan applicant cannot make a large cash deposit. Cash is non existent in the mortgage world. Regular paychecks that is deposited every other week is no problem and can easily be sourced. However, if a mortgage loan applicant has deposited $2,000 in cash from a side job with no providing documentation, it cannot be used. Another example is when a mortgage applicant deposits a large check from a sale of a car or other high ticket item. The large deposit can be used if the mortgage loan applicant can provide a copy of a bill of sale, copy of title, and copy of the check as well as the deposit slip.
What If I Have Large Amounts Of Un-Sourced Cash?
There are many folks who have large amounts of cash in a safe deposit box, often called mattress money. If you are a home buyer and need to use the cash for your down payment of your home purchase and need to source that cash, you need to deposit the cash in the your bank account and show the funds in bank statements for at least 60 days in order to be able to use that cash towards your home purchase. Mortgage lenders only ask for 60 days bank statements so any deposits older than 60 days will not matter.
Earnest Money Needs To Be Sourced
If you are writing the sellers an earnest money check, make sure the earnest money check can be sourced. Your earnest money will convert to your down payment but only if it can be sourced. There are some folks who get cash and get a money order and give the money order as earnest money. Unfortunately, the mortgage loan underwriter will want to see where the earnest money came from and since it was unsourced cash, the earnest money check cannot be used. If you are giving earnest money to the seller and/or seller’s realtor, it should be given with a personal check. The mortgage loan underwriter will want to see copies of the cancelled checks and 60 days of bank statements of the account holder of the checking account.
Many times when the funds in bank statements cannot be sourced, the only alternative will be for the mortgage loan applicant to get gift funds from a family member and/or relative. In order to be able to used gift funds, the donor needs to sign a gift letter which is provided by the mortgage lender which states that the funds are gift funds only and the funds do not be repaid back and it is not a loan. The donor needs to provide 30 days of funds in bank statements showing that the gift funds has been seasoned for at least 30 days and provide proof of funds leaving the donor’s bank account and being wired and/or deposited in the recepient’s bank accounts.