Let’s face it, underwriting a mortgage these days is harder than ever. One of the most common problems we see time and time again revolves around the borrowers money. If you have money under your pillow, in the freezer or stashed between the floor boards you are going to have issues if you plan on using it to buy a house! Let’s talk about “seasoning”.
Seasoning is a term commonly used in the mortgage business to describe money that has been accounted for and okay to use in the mortgage transaction. Think of it this way. Underwriters want to be sure that any money you are spending in the transaction is your money and that there is no behind the scenes payment that is associated with it. If grandma wants to give you money to buy a home then she would sign a gift letter, write you a check and provide a bank statement or letter from the bank to show that she had the money to give you. Without this, one could assume that you possibly borrowed the money and have to pay it back, thus increasing your monthly debt and potential to qualify for the mortgage.
If the money you plan to use in the mortgage transaction has been in the bank for at least 30 days then the lender does not have to require an explanation of where it came from. In some cases the money needs to be seasoned for at least 60 days.
If you’re planning on buying a house or refinancing your mortgage then deposit that money under your pillow so you can use it in the transaction without any underwriting restrictions!