Wendy Patton

Financing - What Are Seasoned Funds?
by Wendy Patton

Real Estate Loan Underwriting Bank BalancesSeasoned funds and paper trails are about being certain you can demonstrate to a mortgage underwriter the source of any unexpected funds that appear in your bank accounts. Typically, underwriters recheck your bank accounts a few days before funding your mortgage. If he or she finds significant but unexpected changes in the account balance it will often result in the mortgage being denied.

Many Sources of Seasoned Funds and Paper Trails

Generally, underwriters want to see a 90 days of documentation for any major and unexpected changes in your bank accounts. The sources of these funds are typically legitimate and can come from many places. They may come from a business transaction that you were planning on to help finance your down payment. Something like a payment to your small business that you transfer to your personal account. Or the sale of another real estate investment that you had in the works. Or the sale of another asset such as a boat. What is important is that these are seasoned funds with paper trails.

What underwriters are concerned about is the funds come from another loan that increases your debt to income ratio. Another relatively common undocumented source of funds is a financial gift from relatives. Unless these are seasoned funds with paper trails, underwriters will consider these as loans that you have to repay. About the only possible solution is having a notarized letter stating this is a gift that will not be repaid.

RELATED VIDEO: 6 Keys to Success Specifically For Real Estate Investors

New Funds Don't Always Kill a Mortgage When These are Seasoned Funds With a Paper Trail

Taking out another loan to help with the down payment and closing costs won't always cause your mortgage to be declined. However, the underwriter will need to know what the terms of that loan are, how much your payments are going to be, if the payments are fixed or variable, and all of the other things that help them determine whether you qualify for this new loan even when making the payments for the other loan. You need to have that paperwork available to show seasoned funds with a paper trail.

Even if the money was a gift from a relative (or otherwise), the underwriter is going to want to know where they got the money. You're still going to need to show 90 days worth of seasoned funds with a paper trail. Lenders are not in the business of repossessing houses. In light of the massive repossessions in the recent past, lenders are demanding a clear view of seasoned funds and a paper trail.

When the funds come from selling a previous property, they are going to insist on seeing the HUD 1 form related to the transaction. When the funds come from selling another asset, the underwriter will insist on seeing a bill of sale (preferably notarized). If the money is gifted, you'll need a notarized letter from the donor along with a paper trail showing where the money came from over the past 90 days.

If you are planning to buy property in the near future or even refinancing, keep all of the paper work involved from significant transactions and voluntarily make it available to the underwriter. If an unexpected transaction comes up while you are waiting for a mortgage to be funded, talk to the loan officer about the seasoned funds and a paper trail that will be needed to keep the mortgage qualified.




Wendy Patton
Wendy Patton is widely recognized as one of the most inspiring speakers on "Little or No Money Down" real estate investing. Her real estate savvy and great depth of experience and knowledge has helped her in orchestrating the most complete and easy to follow, Lease Option Program in circulation.

Wendy is a licensed real estate broker and licensed builder with her own real estate company in southeast Michigan called Majestic Realty, LLC. She is the past President and Board Member of D.O.L.L.A.R.S. Wendy has experience in land development, property management, rehabs, foreclosures, but lease options are her favorite. Now, with over 18 years of experience and hundreds of transactions on lease options, Wendy Patton is extremely excited about the idea of teaching others and being given the opportunity to help others achieve the same level of success.


Wendy Patton Products (6)
CoursesBuying On Lease Options
CoursesGet the Deed
CoursesMaking Money With Partners
CoursesReal Estate Wealth Building Arsenal
CoursesSelling on Lease Options
CoursesWorking with Realtors


Copyright Notice
Copyright 2002-2018 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted
without the express written permission of the Author and/or REIClub.com.

Back to Top

Free Newsletter
Name:
Email:

Article Options
Printer Friendly Page
Send This to Friend

Author's Articles
7 Steps For A Successful 1031 Tax Deferred Exchange
Real Estate Investor - How To Be A Landlord
8 Tips About How to Be a Landlord
Basic Components Of Real Estate Investing Contracts
Beware Of Potential Scams
Buying Real Estate with Lease Options
Control Property Without Ownership Using Lease Options
DIY House For Sale - Good Idea?
Financing - What Are Seasoned Funds?
How To Do A Rent-To-Own As An Investor Seller
How to Find a Buyer Now For Your Deals
How To Find A Seller Now
Lease Option vs. Subject Tos
Lease Options in a Soft Market
Lease Options vs. Subject To's--Different Techniques
Lease Options: Little or No Money Down Technique Part 1
Lease Options: Little or No Money Down Technique Part 2
Lease Purchase Investing
Options On Real Estate Investment Property
Overcome 10 Objections Sellers have to Sub2 Deals
Partnerships for Real Estate Investing
Rent to Buy Best Strategy For Current Real Estate Market
Should You Be Buying Commercial Real Estate?
Subject To Deals aka Get the Deed
The Basics of Buying and Selling with Lease Options
Using Agents to Find Lease Option Deals
Why Soft Markets are Great Markets to Invest P1
Why Soft Markets are Great Markets To Invest P2
Working with Realtors For Lease Options


Author's Products

Buying On Lease Options

Get the Deed

Making Money With Partners

Real Estate Wealth Building Arsenal

Selling on Lease Options

Working with Realtors