Why Do Lenders Care About the Source of Your Down Payment?

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Rates are flat today. Today's rates with no lender fees are 3.625% APR on a 30 year, 2.875% APR on a 15 year and 2.750% APR on a 10 year. (click here for details)

So today I am going to talk about why lenders care where you get the money for a down payment. Yes, moms, even if you're helping your precious child with a down payment, the lender still needs to know.

Lenders need to validate the source of funds to assess any risks that you as a borrower may present AND to prevent a little thing called LOAN FRAUD.

Check it out in today's video:

So you must maintain a complete and detailed record of how the money you plan to use towards your down payment or other costs, makes it into your bank account.

Money from your personal savings, checking and money market accounts is usually best to lenders because these are the easiest sources of capital to keep track of and document.

With these as sources, the lender can ask you to submit statements to them that serve as proof that you have the money available for the down payment and closing costs.

OK - so once you have the money in your account now it must be seasoned.

What it means is if you have money in a bank account for two months, and it shows up consistently in consecutive statements, that money is considered "seasoned" two months.

The money you bring to closing will have to be sourced and seasoned funds.

Any large deposits of capital into your bank account will set off an alarm with your lender. This will require documentation and some much-needed explanation on where those funds came from.

So my advice to you is to start saving and plan ahead! You can't be over-prepared when looking into a mortgage.

It's Friday and that means it's Follow Friday. Check out these three crazy Twitter fanatics. They are moms, so show them some Twitter love!

Jill Falkenberry - Mom, Realtor
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Linda Fox - Mom and mortgage professional

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Let's change the way people shop for a mortgage…forever!

- Mike

PS. To ask a question, get advice, or find out if you're getting the best deal possible on your loan, just post a comment below.