Cash to Close. In the lending business it means having the available money in your account to pay for the required down payment and any closing costs you are responsible for. The funds needed for down payment and closing costs must be “Sourced and Seasoned”.

This is the lender’s way of saying that it must be your money. “Sourced”… means you must prove the money came from your account and that you did not borrow it. You are not allowed to borrow money for the down payment required to borrow money. So…if you are qualifying for a loan and you have a $5,000 deposit showing on your bank statement, you will be required to prove the money came from another account of yours(assuming it is not from your employer or business. This is why you are not allowed to use cash from under the mattress for down payment and closing costs…there is just no way to prove it is yours. “Seasoning”… refers to the length of time a lender will go back in time to source your funds. For example…most lenders will require your last 2 months of bank statements to prove assets. Therefore, your money to close will have to be in your bank for 60 days or more if you don’t want the lender to see a large deposit. Your money in this case would be “seasoned” for 60 days.

Oh…By the way…having charges for Non Sufficient Funds on those bank statements is a MAJOR NO NO!! It cries out to the underwriter…”I CAN’T HANDLE MONEY”!!

Next time we will talk about getting a gift for down payment.