Phone: (610) 272-5888
info@csfa-mortgage.com

 



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Phone: (610) 272-5888

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Down Payment & Closing Fees

On purchase transactions, you must show sufficient liquid savings to pay for the down payment and the closing fees associated with your mortgage. If your down payment is less than 20%, at least 5% of the purchase price must be your own verifiable funds.

There are two types of assets, liquid and non-liquid:

1. Liquid assets are generally funds that are immediately accessible. Some examples of liquid assets include money in savings accounts, checking accounts and money market accounts.

Please keep in mind that cash (i.e. mattress money) is NOT a verifiable asset and therefore cannot be used towards the down payment and/or closing fees.

2. Non-liquid assets are funds that generally take time to obtain or liquidate from the account. A good test for determining liquidity is to ask if there is a penalty for obtaining funds from the account. Some examples of non-liquid assets include money in IRA's and 401(k) or 403(b) accounts.

While it is common to borrow against a 401(k) plan, in order to use the money you must provide the following to your lender:

  • Repayment terms stating the monthly payment.
  • Copy of the loan agreement.
  • Documentation showing the transfer of money from the 401(k) account into another account.
Can a relative give me the money for my down payment and/or closing fees?

When the down payment is less than 20% of the purchase price, you must show that 5% of the down payment is your money. The remaining balance of the down payment can be in the form of a gift from a relative.

If you put more than 20% down, all of the funds can be in the form of a gift from a relative.

Is personal property considered an asset?

While personal property is considered non-liquid, you may sell it and use the money for your down payment if you:
  1. Have an appraisal of the item.
  2. Can show proof of ownership.
  3. Provide a receipt of sale from the person buying the item.
  4. Show evidence of the transfer of funds from one account to the other.
Other asset guidelines:
  • Borrowed, not gifted, funds are not allowed for the down payment and/or closing fees.
  • You must be able to provide documentation showing the source of funds for a newly opened (in the last 3 months) account.

 

 

 

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Centre Square Funding Associates is an Equal Opportunity Housing Lender.