A tax refund is one of several ways to come up with a down payment and closing costs to buy a home.
Many mortgage programs have a requirement that monies used for a down payment be “sourced and seasoned.”
Sourced funds mean showing where the money came from, sales of stocks, withdrawal for a retirement account, savings account, etc.…
Seasoned means you have to prove that you had the money in your account(s) for 60 days. Mortgage lenders ask for two months of bank statements to verify this.
If you need to try a little harder to get that down payment, then keep reading.
Money for the down payment also needs to come from an acceptable source. A good list is available in the FHA guidelines.
Three sources Do Not Need to be Sourced or Seasoned
1. Tax Refunds – You will only need a copy of the check and a bank receipt for this to be acceptable. Check with your loan officer regarding proof of electronically deposited refunds.
2. Insurance Award – If you receive an insurance award, this award is considered sourced and seasoned. The same rules apply regarding the copy of the check and deposit verification.
3. Money Paid to you from a personal property sale, such as a car or a piece of jewelry, that you own. You will need to this by receipt and deposit verification.
The rule here is that if you do not have the money in your bank account already, talk to your loan officer. They are here to help you and will offer valuable advice.
The cash to close is one of the last steps in closing on your home. Do you want to be sitting at the closing table and find out that you do not have the correct paperwork for the source of funds needed to close on your new home? To avoid this consult with your loan officer.
One thing to note is that a cash advance, or a short-term loan, is not an acceptable source to use for closing funds.