Okay, if you are paying actual CASH for a property, yes, maybe, cash can be king. However, if you are buying a home using a mortgage loan cash is NOT king.  I'm talking about literal cash here, the kind you just have laying around the house.


Part of the home mortgage loan process is documenting funds that are used for down payment or closing.

There are established rules about what is acceptable.



All the rules I'm not covering here, that would be too complex. One thing that is not acceptable is to show up at closing with a fist full of cash the source of which cannot be documented. The adage "Cash is King" works well in many scenarios. Who among us would not prefer to have plenty of cash and need credit for nothing? 


If you are planning on making a home purchase begin immediately to keep your money in a depository where it can be accessed when necessary, and also if you make any deposits other than what is clearly from employment keep accurate detailed record of those deposits. If those deposits appear on a bank statement the underwriter for a home loan will need to see documentation. It can be difficult to go back and document where funds came from after they are deposited. 


Best practice if you find yourself with cash on hand when you are ready to buy a home use that cash for groceries, gas, lunch or dinner, other items you spend money on during the month as opposed to making a deposit for which you cannot verify the source.  Above all be aware if you are getting a mortgage loan unusual deposits will need to be documented so think before making deposits.


There are legitimate deposits like a tax refund or someone gives you birthday money. In the event you find yourself with checks to deposit MAKE A COPY OF THE CHECK BEFORE DEPOSITING. Then if the question arises you'll have proof of the source of the deposit. And when it comes to cash at home just don't. Don't keep cash at  home that you later want to use for a home purchase. It doesn't work that way. Deposits have to be verifiable that they did not result from some illegal or undocumented act. You should discuss the funds needed for a home purchase with your loan officer to make sure you don't have any last minute surprises. 



Comment balloon 0 commentsDora Griffin • March 27 2019 04:24PM