How you use your money make affect your mortgage options

If you want a mortgage you need to be prepared financially and have all your ample documentation set up and ready to go. One such thing you need to be aware of is using cash. Here’s how to best support your cash when using down payment monies and or reserves to purchase a home….

First things first when you’re buying a house you need to be able to have cash, credit, and income. One of the things which are integral to getting a mortgage is having verifiable cash. It’s realistic when you purchase a primary home you need to go to have a down payment as little as 3% down on a conventional mortgage.

Other options exist including 5% down for conventional financing and FHA 3.5% down financing. The down payment money can typically be your own funds from a validated bank account. Cryptocurrency may return some strong yields but is not an eligible bank account. The money must be in a legitimate bona fide bank account, 401k, stocks, bonds, CDs, mutual funds any kind of a traditional institutionalized bank account is acceptable. If the money is in one of those accounts the money is considered eligible.

Primary Home transactions also allow for the use of gift funds. Once again these monies must be documented and sourced and signed gift letters from the donors are required to count this money as eligible. Money sitting at home in a safe will not work, money sitting at home in grandma’s safe will not work. Most mortgage companies typically require two months of bank statements for funds to close.

So for a vacation property gift money is not allowable. 10% is the magic down payment percentage to buy a second home or vacation property. Granted you’ll have to have enough income to offset both the housing payment you presently have if you have one as well as the vacation property payment as well. Vacation homes also sometimes required reserves dependant on the debt-to-income ratio and credit score.

Rental property transactions do not allow for gift money at all and specifically require several months of payments in the bank what are known as reserves as mentioned above.  So know this when using money to buy a house don’t have the money sitting at home in a safe, don’t have the money in cryptocurrency. If your money is in one of these sources doesn’t mean you can’t qualify it just means the transaction may take a little longer as time passes to have 60 days bank statements.

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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