When considering the Source of Funds For Down Payment, remember different lenders have different rules. Generally, Mortgage lenders want borrowers to meet the down payment requirement with funds they have saved because this indicates that the borrower has the discipline to save. For this reason, they may restrict the amount of the down payment that is provided by gifts from family and friends.
In today's aggressive mortgage market 100% financing programs are widely available and you may not have to have a source of down payment funds if your credit score is good enough. However keep in mind that with no down payment you will have slightly higher rates and your PMI payment will be higher than it would be with a down payment.
If you are planning on purchasing a home, please ensure that as early as possible in your process you deposit or allocate the funds for down payment. Keep in mind that lenders will try to determine the source of funds by tracing the funds back to their origins.
If you are getting married and looking to purchase a home, you can set up a registry for down payment funds. This makes for a practical wedding gift and can be documented as down payment funds by your lender. Call Dave Zwiereckiat 888-418-4467 or [e-mail] for more details.
When a lender is sourcing the funds for a down payment, they will be tracking where the money came from and they want to see the money has been in your account for at least the past 60 days. If you have any large deposits in your bank account or your investment account, the lender will probably ask for some form of proof and explanation about where the money came from. If you can not successfully provide them with satisfactory evidence about the source of the funds for the down payment, the lender may not allow this money to be used as a down payment according to their guidelines. Therefore, be cautious with your down payment funds and plan ahead accordingly.
Savings or investments are important source of funds for a down payment. The larger your down payment the lower your risk that you will be negatively impacted by a decrease in home prices.