When borrowers are required to come up with a down payment and closing costs for their new home’s mortgage, the money can come from different sources. The first is when the borrowers have saved the money and have it already in a checking or savings account.

The next way is borrowers can borrow against their IRA or 401K, this really a great option and many borrowers didn’t even know this was 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 giving their kids the funds for the down payment or closing costs to help with the home purchase.

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 must be seasoned; in other words, the borrower will have to supply two months of bank statements and cannot use any cash that was deposited into the accounts.

Also, if a cashier’s check is used, the source of funds to purchase that cashier’s check must be verified and seasoned.  Again, it’s important to use a local mortgage broker who will sit with and explain all aspects to the borrower. Indigo Mortgage has been helping New Mexicans purchase homes since 2003, providing mortgages to fit each homebuyers’ specific needs. Let us help by providing answers to your mortgage questions and a proposal with mortgage rates and terms that will be hard to beat.