When preparing to buy a home that will have a mortgage, borrowers are required to come up with a down payment and closing costs. That money can come from different sources. The first is the borrowers have saved the money and have it already in a checking or savings account.

The next way is that borrowers can borrow against an IRA or 401 K— this really a great option and many borrowers didn’t even know this is a possibility.

Then there is Gift of Funds form a relative, a gift is just that, a family member can gift– not loan– the money to the borrower. This is usually a parent gifting the funds to their adult children.

Cash is a killer in the real estate business so cash cannot be used as a down payment source. Because of anti money laundering laws, cash cannot be used in a real estate transaction.

Any funds used in a real estate transaction have to be seasoned, in other words, the borrower will have to supply 2 months of bank statements and cannot use any cash that was just deposited into the accounts. Validating the source of funds is a key point in the mortgage application.

If a cashier’s check is used, the source of funds to purchase that cashier’s check must be verified and seasoned.

There are lots of steps and processes in applying for a mortgage to purchase a home. We think it’s important to use a local mortgage broker like Indigo Mortgage, someone that will sit with you, explain all aspects of the process, the down payment options, and help each borrower find the right home loan for them.

If you have questions about the mortgage process and you’re buying a home in the Albuquerque metro or anywhere across New Mexico, give us a call. We’re happy to help find the best rates on an Albuquerque mortgage!