Hey, Kyle, here with the winthehouseyoulove.com.
I hate to bring it to you, but you can not use whatever money you want for
your down payment and closing costs.
In fact, when you get a mortgage anti-money laundering, laws require
that lenders verify any large deposits in your bank account.
So for a lot of people, if they can't prove why they have a large
deposit, which I'll explain here in a little bit, if they can't explain why
there's a large amount of money that got deposited into the bank account.
It can kill their loan and they won't be able to close on a home.
So that cash that you've been saving, maybe under your mattress over a period
of time, you would likely can't use that to close on a home without this trick.
So I'm going to show you a strategy, a plan that you can put in place that
is both suggested and verified by mortgage underwriters that you can use
to make it easy to use, whatever money you want when you want to buy a home.
Okay.
So what ends up happening when you apply for a mortgage, a lender then
needs to verify the amount of money you have with bank statements.
And usually they ask for two months, 60 days worth of bank statements
to see that you have that money.
So the first thing that they need to verify is that you have the money.
If it's going to cost you $15,000, total for down payment and closing
costs to buy a home, they need to be able to see a bank account that
has $15,000 at minimum in there.
And they also need to see a two month history of 60 day history of that bank
statement to make sure it came from an acceptable source, which we will explain.
So then the more they're going to do is review the transaction,
the transaction statement.
So your bank statement, make sure it's not laundered or borrowed.
So they're going to look through line by line and see if there are any large
deposits into your account that they would either flag as a, Hey, maybe we
need to look in this a little bit and the sooner would be called an unusual or
a large deposit
So just an abnormal sum of money that comes in.
That's not your payroll that they need to check for.
And the reason why they check for money laundering is because of the Patriot Act.
After 911, the Patriot Act came in and said, if we have access to
bank accounts, we're going to check to make sure that there's no money
laundering activity happening.
They also don't want the fund to be funds to be borrowed.
So you can't just use a credit card for your down payment lenders.
Don't allow you to do.
Now, one thing to note here is that the lender is going to be looking at your
transactions in your bank statement.
Looking through that, seeing if there are any large deposits, whistle, explain
loan by loan here in just a second, but your lender doesn't really care about
what you're spending your money on.
They don't care that I go to Chipotle pretty much every day.
They don't care that you went to Speedway every other day.
And sometimes it's funny, there's the loan officer here in our office where
our client was like, you just want to see how much money I spent on sex toys.
And it's like, well, I didn't, but now I'm curious, your loan officer
and your lender don't really care about what you're spending your money on.
They want to see any large deposits that they need to ask questions
about, to be able to basically get a paper trail for them.
Also, they want to make sure that those, the money that you have you're closing
for down payment and closing costs come from what's called an acceptable source.
And I have a list for you here in just a second.
So this is what the underwriter is.
We're going to ask these two questions first through when they're looking
through a bank statement, is it an unusual or a large deposit, which I
have a list for here in just a moment then if it is they're going to ask,
is it from an acceptable source?
Those are the two things that they're looking at here to see if they're going to
question the deposit in your bank account.
And if they question it, we need to be able to prove it with a paper trail.
Otherwise you will not be able to use those funds.
As your down payment or your closing costs, you have to find another way
to come up with the money, or you will not be able to use that loan to close.
So here is a chart based on the loan that you're using and what is considered a
large deposit because it changes between conventional FHA, VA and USDA loans.
So for Fannie Mae and Freddie Mac, which both are conventional types
of loans, it says if a single deposit
Exceeds 50% of the total monthly qualifying income,
then it has to be documented.
So for conventional loans, if it's higher than 50% of the income
that you're using on your loan, then it has to be documented.
Okay.
For FHA recent individual deposits more than 1% of the property adjusted
value in adjusted value explanation is here
If you want to screenshot and look into that a little bit more, basically, they're
saying that the property, the purchase price minus any closing cost credits, or
if the property value appraised is lower, VA doesn't have any guidelines on this.
So just expect if you have any abnormal deposits that they're going to question,
and then USDA says, investigate all deposits on the accounting state
account statements that are not attributed to wages or earnings.
So with VA and USDA expect a little bit more scrutiny.
So then that brings us to the question, what is acceptable and what is
accepted and what is unacceptable.
So what is acceptable is commonly approved.
That's often why see, gets through no problem.
Unacceptable is commonly denied.
Some lenders might have different things where,
they will approve those sources.
But for most lenders, these are the ones that I see are commonly denied.
So on the acceptable side, payroll, super easy.
Payroll.
It's usually never questioned.
They can see your company name in there.
And then that is perfectly fine as a deposit in your account.
That's what most people have as large deposits is their payroll.
Another would be a gift from a relative.
Okay.
So if you got a gift from, let's see your parents for the down
payment, that's perfectly acceptable.
As long as it is documented, according to your lender standards.
For some reason, it says ads in here.
That's not part of this video.
If you sell any stock, you can use that for a down payment or closing
costs, a tax return, extremely common.
And you can absolutely use that for your down payment and closing costs,
documented sale of a personal item.
So let's say you sold your car.
You can use the money that you got from that sale.
As long as the sale was documented money from the sale of the home.
So if you just sold a home, you got, you got a check for that.
You can use that a home equity line.
You can use that as well.
Inheritance settlement, 401k loan, or withdrawal, you absolutely can use those
for your down payment closing costs.
Those are acceptable sources of funds.
So let's move on to what is unacceptable.
The biggest one that catches most people is cash on hand.
So if you have cash that you've been seeing.
Some of that kind of money that's been sitting on our mattress or it's in a safe
somewhere or wherever you have it, most of the time you cannot use that cash.
And I see people all the time, they want to take cash deposited
into their bank account.
But then the underwriter says, where did $5,000 come from?
And they say, oh, I've just been saving it over the past few months,
or couple of years, whatever.
In the underwriting year, you can't use that because they
cannot source where it came from.
You cannot source cash.
Some lenders do have a way around this.
Most do not.
So I wouldn't anticipate it.
Another one is you cannot use credit card cash withdrawals.
Sometimes I see people saying like, if you can't afford down payment, just put on.
You can't, it's not a thing that you can do Sonics available
source unsecured, personal loans.
So if you've got a cash advance, you can not use it.
And then of course, money for illegal activity.
Shouldn't even have to say it, but if you're pulling the nose on kindness,
you can't do that, unfortunately.
Sorry.
So here is your seasoning plan.
Seasoning is just the word used for when we put money into a bank account and
we let it sit there for a little bit.
Seasoned.
Okay.
So here's how this works is a three step plan.
Number one is they're going to add money to your bank account.
So in this situation, let's say we have $5,000 in cash.
Okay.
I can take that money, put it into my bank account today.
Then I can wait at least 60 days.
After that time period is up, the bunny has been seasoned.
And so we will now be able to use transaction history, statements and bank
statements to then show only 60 days to the lender because most lenders only
need 60 days worth of bank statements.
And so we can pull together bank statements, plus a transaction summary
to show them a full 60 days, right.
Because if we're in the middle of the month right now, we
don't have a transaction.
we don't have a bank statement for this month, so we need to pull the.
60 days.
All right.
And that was where our large deposit was.
We can actually use a bank statement plus a transaction history for,
to make up those in-between bank statements, to be able to show the
60 days without showing the deposit.
One thing you want to keep in mind here is that the funds
won't be questioned unless seen.
So if you send a statement to an underwriter that has that cash
deposit in there, even if it's older than 60 days, they're still a lot
of question it and don't have to accept it as an acceptable source of
your down payment and closing costs.
So that is why we're using transaction statements and bank statements
to piece together a full 60 days.
And you can talk with us about to your loan officer about this
How do I just show this a few days and they can help you figure
that out with the dates of your closing and what day it is today.
Okay. So this is what this looks like.
Sometimes people get confused about bank statements and transaction history.
transaction history is where you would go to your bank.
you can usually do this online, so you can pull up your bank account
online and usually print the history of what's going on in your bank account.
you just wanna make sure it's still has all your bank account information,
like your account, number, your name, address, all of that listed on there.
And then I blinked out some, uh, cause this is my transaction somewhere here.
So I blanked out quite a bit, but this is what the lender would be looking
at to be able to see the 60 days.
The bank statement is what you get once every month from your bank.
That would then tell you what happened just over that month period.
So we would use these two documents to only show the 60 days.
So just a quick recap of this plan, you can add basically any money
here that you wouldn't normally be able to source wait 60 days.
And then it is seasoned since it was already in their account.
And wasn't deposited in the most recent 60 days.
It wasn't seen by the underwriter.
It is not questioned the money that happened to be in your account before the
60 day period does not get questioned.
However, within the 60 day period, it will get questioned if
there's a large deposit in there.
So if you want to learn more about what is the minimum down payment on a home,
obviously you can pay whatever you want.
As a down payment, you can increase that it's going to lower your monthly payment.
But if you're curious about the minimum down payments of different types
of loans, click on this video here to learn more.