Refinance Mortgage Tips Down Payment From Savings

Refinance & Mortgage Tips: Down Payment From Savings
Once you’ve figured out how much of​ a​ down payment you​ can make on​ your home mortgage,​ it’s time to​ determine how to​ document the​ source of​ your funds for the​ down payment and closing costs .​
Now you​ might be saying,​ Why do they care where I​ get the​ money? Lenders need to​ verify the​ source of​ funds to​ both assess the​ underlying risk in​ you​ as​ a​ borrower as​ well as​ to​ prevent loan fraud .​
This makes it​ imperative for you,​ the​ applicant,​ to​ maintain complete and detailed records of​ how the​ money which you​ plan to​ use for a​ down payment makes it​ into your hands .​
Money from your own savings,​ checking & money market accounts looks best to​ the​ bank for a​ variety of​ reasons,​ and is​ amongst the​ easiest sources of​ capital to​ document.
Money in​ the​ bank is​ also very easy to​ document .​
The lender has the​ option of​ asking you​ to​ submit bank statements to​ them indicating that you​ have the​ money for the​ down payment and closing costs,​ or​ performing a​ formal Verification of​ Deposit directly with your bank .​
Most lenders ask for statements,​ generally 2 to​ 3 months if​ you​ are providing full income documentation or​ up to​ 24 months if​ you​ are providing alternative documentation of​ income.
When discussing your down payment,​ your lender may discuss the​ topic of​ seasoning requirements with you​ .​
If you​ have money in​ a​ bank account for 3 months and it​ reflects consistently in​ consecutive statements,​ that money is​ considered seasoned 3 months .​
Your lender may require that your down payment money be comprised of​ seasoned funds,​ and that any large influxes of​ capital into your bank account may have to​ be extensively and thoroughly explained,​ documented,​ and potentially disqualified .​
So start saving and plan ahead!
There are loan types which do not require any form of​ documentation in​ this regard,​ particularly No Asset Verification mortgages or​ no assets loan programs .​
Just as​ it​ sounds,​ this type of​ mortgage does not require any verification of​ assets,​ however lenders generally do not allow the​ applicant to​ borrow more than 60% to​ 70% of​ the​ property value without some form of​ asset verification .​
There is​ another type of​ loan program which is​ increasingly popular over the​ last few years called Stated Income Stated Assets mortgages,​ which allows for limited verification of​ assets,​ and some of​ these programs allow up to​ 75% or​ 80% of​ the​ property’s value to​ be loaned to​ the​ borrower.
Buying a​ home with no down payment,​ often referred to​ as​ a​ no money down mortgage,​ has become a​ popular way for first time buyers to​ enjoy the​ benefits of​ homeownership without substantial savings,​ however it​ is​ important to​ note that borrowers who want a​ zero down loan will be faced with higher interest rates and monthly payments and are statistically shown to​ have higher rates of​ default and foreclosure.
No matter what you​ decide to​ put down,​ if​ you​ have and can document assets above and beyond the​ down payment and closing costs on​ the​ home and mortgage you​ can establish reserves with your application .​
Having ample capital reserves,​ good credit,​ and your down payment sitting in​ your bank account for a​ couple of​ months can in​ combination help you​ qualify for some of​ the​ best programs available,​ and potentially save you​ hundreds of​ thousands of​ dollars over the​ life of​ your mortgage.

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