The source of a down payment is very important for First Time Buyers purchasing a home in Placentia, CA. It is actually very important for any type of mortgage in 2010. Lenders want to make sure the down payment is not borrowed, especially from a credit card.
Providing proper asset documentation and the actual source of the funds is a critical element in the loan closing process. Being aware of what sources are allowable can provide a home buying opportunity to a Placentia First Time Buyer. Almost more important is to know what sources are not allowed.
The seasoning of funds is just as important as the source. Lenders will ask for 2 months most recent bank statements in order to verify the “seasoning” of funds to close. And not just the front page of the bank statement. The lender will want to see all pages to make sure there hasn’t been a large deposit in the previous 60 days that needs explaining.
Below are Acceptable Sources of Funds for a Placentia FHA Home Buyer
- Bank accounts, which could include checking, savings and money market
- Investments accounts you may have, such as stocks, bonds or certificates of deposit
- Retirement Funds – Some 401K may allow you to borrow against it for your down payment. A cool thing about FHA financing is the 401K loan payment is not included in the overall debt to income ratios.
- Cash value and face amount of life insurance policies
- Value of significant pieces of personal property, including automobiles. Note: Providing documentation of ownership will be required.
- Gifts – Family members can support your cash requirements since no repayment is required.
- Inheritance/Trust Funds – Inherited or trust fund money is also an acceptable source of funds since there is no repayment.
- Government Grants – Many state, county and city agencies will offer an ary of down payment assistance programs.
FAQ Regarding Funds to Close an FHA Loan in Placentia
Q: Suppose I do not have a bank account and cannot properly source my cash to close?
A: Cash on hand is still an acceptable source of funds for some loan programs, however this is probably the most difficult and time hungry source.
Q: Can I use a bonus from my employer for my down payment?
A: Yes, but this needs to be a bonus you regularly receive, although other scenarios may be presented on some loan programs.
Q: Can I borrow the money from a friend?
A: No, any money that needs to be repaid is typically a poor source of funds.
The first step in the home buyer process is to talk to a lender. Finding a local Placentia loan officer who is an expert in FHA and VA financing is important. The loan officer should be able to provide loan scenarios which will show you a purchase price, loan amount, payment, and estimate of closing costs based on your goals and qualifications.
Authored by Tim Storm, a Placentia, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about a Placentia, CA home loan. 877-786-4243 x 7.
Contact me for your Placentia FHA Mortgage:
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
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