Clients’ cash deposits can delay closing

12/03/2013

Clients’ cash deposits can delay closing

Clients’ cash deposits can delay closing

WASHINGTON – Nov. 20, 2013 – Homebuyers who make out-of-the-ordinary cash deposits to their checking accounts during the processing of their mortgage – ones that don’t come from payroll checks or income tax refunds – will likely face delays in closing, experts warn. The reason: Lenders must investigate any suspicious activity, such as undocumented deposits that aren’t easily explained, which can slow down the approval process.

Scott Sheldon, a senior loan officer with Sonoma County Mortgages, told Credit.com that only money “adequately sourced” can be used in the mortgage transaction.

“If you are self-employed and show cash deposits, that’s OK – so long as you claim those monies as income on your tax return and you ‘show’ income from a filing standpoint,” Sheldon says.

For example, if borrowers receive money from parents or family members, they will need to document and explain that deposited check to lenders. Sheldon says that buyers may want to avoid making deposits that must be explained at least 60 days prior to closing.

Source: “How Cash Income Can Cost You When Applying for a Mortgage,” Credit.com (Nov. 18, 2013)

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