10 years on from the Great Recession and Americans are buying homes once again. Spurred on by low unemployment rates, and steadily rising wage growth, consumers have contributed an estimated $514 billion to the country’s housing market over the past year.
But despite these signs of positivity, there are still some real concerns around the purchasing process. Not only do prospective buyers have to deal with rapidly appreciating property values and low inventory, they’re also being met with some serious difficulties in securing adequate financing. Following the 2008 mortgage crisis, lenders are simply far more cautious about which applications they approve, that means aspiring homeowners have to put in far more work to present a transparent, reliable view of their finances.
Perhaps the most important part of this process is ensuring the availability of seasoned funds.
What Are Seasoned Funds
Before lenders can sign off on a six-figure mortgage, they need to determine whether you’re a responsible borrower that can pay off due mortgage payments in a timely manner. In particular lenders want to make sure that you’re not taking on additional loans to fund your down-payment, as this sends clear red flags about your current financial position.
In order to provide necessary assurances to any financial institution you have to gather a clear paper trail which shows the transfer of funds into your down-payment account. This applies whether you saved the money over time, cashed out your IRA to secure the funds, or even if you received the money as a one-off gift from your family. In each case you should have clear documentation showing where the money came from, and when it was deposited. In particular, underwriters are guaranteed to question any large deposits which fall outside your regular banking activity.
But that’s not all, just because you have legitimate funds in your account doesn’t mean they represent an accurate view of your financial position. Most lenders require down-payment money to be present in your financial statement for a period of at least two months, although a 30-day period may be sufficient for conventional loans.
This 60-day period provides lenders with two key confirmations. First, they can reasonably assured that the money is in fact, yours. Secondly, if you have secured funding through another loan, then the additional debt will show up on your credit report within this time frame.
Tips To Ensure Adequately Sourced and Seasoned Funds
- Create a separate bank account for your down-payment savings
- Make regular deposits into this account from your monthly income. A steadily maintained bank account with seasoned funds is essential for securing any loan.
- Round up all your bank statements and documents related to any investment activity.
- Any large amounts of receive that you plan on putting towards your down-payment should be deposited immediately, make sure to make a copy of any checks before cashing them.
Need Additional Assistance in Securing a Mortgage on Your Dream Property?
Christopher Lechner specializes in purchasing real estate and can provide you with expert guidance in your search for financing. Call Christopher now at (565) 221-0055.
Published on 2018-01-30 15:55:38
