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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