– In this video, I'm going to be talking about cash and how that plays a
part in purchasing a home and getting approved for financing. The problem is so many of you out there have cash maybe in a safe at home or under your mattress, or maybe you just don't believe in banks. How do we get that into your bank account, so that, me as a lender, I can make sure that we can get you financing for a home, and we're not going to have any problems throughout the loan process.
In this video, I'm going to be talking about why it's so important
to season your money, what does that mean, and how to best help your lender help you get approved for your home loan. And if we've never met before, my name is Sean Uyehara, I'm a sales manager with loanDepot, helping you finance your
homes all across America. Whether you're thinking of purchasing, refinancing, buying an investment home, or even your first home, I've got you covered
all across the country. Make sure to hit the description below so you can click the links to learn more about how to get your mortgage right. One of the biggest issues
that we have in lending is we need to make sure
that we can document where your closing funds, your down payment, and your earnest money comes from. One of the bigger issues that we have is money laundering. And we need to make sure that as a lender, we can track and trace where the funds are coming from.
We don't care what you
spend your money on. We don't look at your bank
statements in that sense, but we do look at the bank statements and how much money is there, and how much of it is
going to get allocated for your earnest money deposit, how much of that is going
towards your down payment, and then at the final signing, when you send in your final wire, how much of that money will you need to close on the house. All of these things
should be covered up front when you get pre-approved
with your lender. This is why it's so important to make sure that when
you're getting pre-approved, you do provide the bank statements of where the funds are coming from, so that way your lender can make sure you're not going to have any issues.
Now, if you're watching this video and let's say you work as a waitress, or you work in a nightclub, or you work somewhere where you get tips, a lot of tip earners
all across the country like to save their money at home. So, you might have a shoe
box with $10,000 in it. You might have a safe that has 10 grand or 20 grand in it, and you deposit the money
when you feel like it. The thing you want to make sure is that you communicate
this with your lender, because if you go to the bank tomorrow and you deposit $9,000, cause you want to stay
under the $10,000 limit, we still need to know
where that money came from. So, your mortgage lender
is going to ask you, hey Eugene, where did this $9,000 deposit come from? Well, it came from my shoe box.
Well, we're not going
to be able to use that because we can't source
and trace the money. Now, what does that mean? Now, if we rewind the tape back to 2007, when subprime loans were running rampant, people were literally getting other people to buy houses with their credit, as they would give them the money to go buy the house. That's what's called a straw buyer. So, you're essentially doing
fraud to purchase homes. So, that's one thing
that a mortgage lender is going to look out for.
We need to make sure that your money is your money. Because if you deposit that 9,000 bucks, where did that money come from? Did it come from the realtor who's representing you 'cause maybe they want to buy a house, but their credit sucks? Or maybe it's money that you're laundering for somebody else. There's so many things that could literally be out there that you might be doing
all the right things, and you want to do the right thing, so you don't get in trouble, but as a lender, we need to make sure that
everything checks the boxes. But let's just say you do have some cash that you need to put
into your bank account in order to use that
funds for your purchase.
Typically in the mortgage world, we want to see that the money is seasoned, and by seasoned, I mean that the money has
been sitting in your account for at least 60 days. So, sometimes what we've done in the past with our clients is, let's say, they do have that $10,000 that they're going to deposit, that's fine, we may need to wait the 60 days so the money sits in the account. So that way, when we do ask you for
your bank statements, we don't see that large deposit that goes in there. And that's one way that you can get around having to source those funds. Now, of course, not everybody has time to wait to let the money season
in their bank account. So, there are other ways that you can get around purchasing a home by also utilizing a gift.
So, let's just say you
have a family member that wants to help you
with a home purchase, if they have the money
sitting in their account, they can certainly help
you with the down payment. They just need to sign a gift letter. They can wire their money to title and help you with a down payment. Then you can go ahead and reimburse them for the money after the closing. This is one of the most common ways that a lot of clients like you, if you're using cash, that you can get a family member to help you with the purchase. Now, let's just say you
don't have a family member that has the funds. Unfortunately, you may need to wait or make sure you get with your lender ahead of time if you're thinking of purchasing, so that way you can get the money in the account, it's seasoned, you're not going to have any issues. So that way, once you do get qualified, you kind of eliminate that one headache that's really going to kill the deal at the end of the day.
Now, another thing that comes up is if you were to take
cash out of one account, let's say your savings, and you wanted to move that into your checking account, you can certainly do that. But one of the things I
strongly suggest you do is however much money you pull
out of the savings account, you want to take that same
dollar amount to the T and put that in the checking account. For example, let's say you were to
pull out $10,000 again.
You want to deposit the entire 10,000 into the other account, so that way there's no issues, and again, we can paper trail the money. I can look at your savings account, see the withdrawal, I can look at the checking and I can see the deposit. The problem becomes, if you go and take out $10,000 out of the savings account, and now you go and deposit $9,200 into your checking account, the issue is going to become, what happened to the $800? You can say it's the same amount of money.
However, we now have that in question. And whenever you're getting a home loan, you don't want to give the
underwriter any sense of doubt, because if they have doubt, they're going to ask questions. And when they have questions, they need you to be able to prove that, so that way we can sign
off on the condition, we can move forward and
get your loan approved. That's also another big red flag when it comes to cash
and purchasing a home. Another thing we like to consider with cash deposits is, is it consistent? So, let's say you are a bartender and you do get cash tips and you're depositing
money every single Friday. Now, an underwriter is
going to look at that and see, okay, you have
a history of doing that, you're consistent. And the dollar amount that you're depositing is consistent.
So typically, a letter of explanation could easily satisfy that condition, explaining why you do what you do. Again, if we go off the rails and let's say one Friday, you deposit 5,000 bucks and normally your deposits
are a thousand bucks, the underwriter's going to ask, where did this money come from? What happened? So again, if you have a
good letter of explanation, that could easily satisfy the condition. However, if you've got
some cash in the shoe box that you're trying to
throw into the account, be prepared to answer those questions from the underwriter, or just know that you may need to come up with some extra funds
in order to purchase. Those are some of the biggest red flags that we see when it comes to cash and financing a home.
So, make sure to check out
this playlist right here, so you can learn more about how to get your mortgage right. And I'll see you on the next video..