Home Buying in Alexandria>Question Details

Blue Bayou, Home Buyer in Alexandria, LA

Why is my "mattress money" CASH unacceptable as a down payment on a home?

Asked by Blue Bayou, Alexandria, LA Tue Jan 31, 2012

With the dream of purchasing a small house in mind, I have for decades deposited into my home safe every single dollar I could possibly scrape together. Finally, after a great many years of sacrifice, I have accrued approximately $100 thousand dollars in cash.
I have now been informed that because I did not keep my savings in a bank account for the past 3 years, it is unacceptable for use as a down payment on my dream home!
I am heartbroken. Any advice? (I am a 57 yr. old disabled retiree with an excellent credit score)
Thanks in advance and I appreciate your professional input.

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Answers

152
BEST ANSWER
Truth is it is sad that our American currency in hand can not be used to buy real property. Unless it is in binary code in some bank somewhere it is pretty much only good for fast food bills and a tank of gas.

I would start depositing it into a bank account immediately in about 2,000 dollars a week for 50 weeks. I would see if the seller would do a lease purchase with you for 1 year with about 5k in earnest money that you get made into a certified fund from your cash savings. Then close on the house with a loan that you get from a lender. The new rules that go into today's home buying financing can be discouraging, but try not to lose hope.

The only other thing I could think of is to try and show where the cash came from, i.e. cash back from checks cashed at your bank, atm withdrawal receipts or anything of the like. It is sad that this is a reality and makes me wish we still bought things with gold and silver coins since our money is not worth the paper its printed on.
Web Reference: http://timetomove.biz
11 votes Thank Flag Link Mon Feb 13, 2012
I would put it in the bank 30% of your income per month then around Christmas ,tax return ,other holidays, and your birthday put in larger amountslet it sit 60 days then buy a house
Flag Mon Jan 18, 2016
People don't seem to understand that if you want to borrow MY money then I get to set the rules! If you don't like my rules then go get the money somewhere else. Duh. And don't worry, Will, no "smart donkey" will be emailing you!
Flag Thu Jan 14, 2016
this is sad when the IRS, FBI, Police & Banks think that just because some has a large amount of cash these days is soemthing illegal. I had an Aunt that did not believe in banks and she had cash in a safe (a lot of cash).. I would think that someone selling a home who delight in getting cash money. BUT the true thing here that no one wants to say (And I will say it) is that BANKS & the GOVERNMENT want the money that this man has saved. Probably by doing without things in life he needed or even a small vacation not taken. I want to just THROW UP IN MY MOUTH about this. I DO NOT WANT any smart DONKEY emailling me either and no government official harrassing me for speaking MY OPINION...!
Flag Thu Jan 14, 2016
I would think that someone on disability suddenly starts depositing $2000 a week into a bank, it would draw attention. Also I would be surprised if the bank did not notify DEA/FBI/IRS when he wanted to pay $100,000 in CASH. No one these days has that kind of cash unless they are engaged in some illegal activity. Sad but true.
Flag Thu Jan 14, 2016
this suggestion is illegal--DO NOT DO WHAT IS SUGGESTED ABOVE. Go to your bank and discuss your exact situation with them. Plus, DO NOT PUT YOUR CASH IN YOUR CAR AND DRIVE IT TO THE BANK--policing agencies can stop you for carrying too much cash and confiscate ALL of it by merely claiming it is from ill-gotten gains.
you'll thank me later. JD
Flag Thu Jan 14, 2016
Sounds like and confirms my belief--Banks are money grubbing criminals. Take your money and buy an island.
Flag Thu Jan 14, 2016
WHY ever would u keep it in a safe? It could have place in a high yield interest savings account, a CD, or invested as a monthly annuity with Charles Schwab. In short, your money could have been accruing interest all these years. If u are on disability u run the risk of losing it if your deposits exceed your allowable income limit.
Flag Thu Jan 14, 2016
Also depending on the loan type. The funds should be seasoned for 60 days that you deposit into your account. If they are seasoned and not showing the two months most recent bank statements that you supply to your lender there will be no issues as to where the funds came from and documentation will not be required in most cases.
Flag Thu Jan 14, 2016
I would take the cash for a home I own free and clear
Flag Thu Jan 14, 2016
Is it true that if your getting disability your not allowed over $ 2,000 in your account ? It is so sad that someone who saves their money has to explain their self to the government ..
Flag Thu Jan 14, 2016
It is unacceptable because it looks like you borrowed it from an undisclosed source, which would screw up the income/debt ratios if disclosed. So then the underwriter must ask for the terms of the undisclosed loan. Lenders are required to watch for any signal that doesn’t look right, any deposit that exceeds income doesn’t add up. No one in the mortgage business would think that keeping $100,000 in cash at home is a normal thing to do.
You can deposit it and then wait until the large deposit does not show on your bank statement, with that much down DU will probably not require more than one month’s bank statement. An underwriter can always ask for more but usually do not if everything else is in order.

The bank will be required to report to the IRS any combination of cash deposits that equal or exceed (I think this is the correct amount) $10,000 in a 30 day period.
9 votes Thank Flag Link Tue Jan 31, 2012
You have to disclose it but depositing the entire amount is not illegal. Just like taking large sums of money out of the country isn't illegal. Yes, you disclose it but doing so is not a criminal offense.
Flag Thu Mar 3, 2016
It's been changed to $5,000 from what I've been told.
Flag Thu Jan 14, 2016
"Be safe!" Ha!
Flag Thu Jan 14, 2016
I am purchasing my 7th home as I write. I think Michelle's advice is solid. I have to show the source of my income, where my earnest money was drawn from and cashed, and two months of statements from the account the earnest and closing money will come from. I have almost perfect credit, good income source, and low debt. Put some money in the bank, apply for a LOAN in two-three months. You will be quizzed about the source and why you only have two months- give your best answer. You can always make a large payment to close out the loan. It will cost more than a cash sale but it is legal and it should work. If you have disability income, you have documented income. Don't lose hope and look into the small banks. If funds are clean, can't see an issue. As a former special employee of the DOD, I think stashing that much cash is an unacceptable risk. It's your money and YOU must protect it. Stashing it as you are also risks your life and those around. Good luck, PLEASE be safe
Flag Thu Jan 14, 2016
I'm not only a homebuyer as it stated, but I have processed mortgages in Texas for 18 years. Each state rules are different on certain things, but for the most part the base of the regulations set in place by the Government are the same.
Flag Thu Jan 14, 2016
DU is Direct Underwriting...a term used in the mortgage industry when dealing with Fannie Mae. There are still small local banks that will accept your word as to where you received your money, but typically your money will need to be seasoned in an account for 2 months to prove it is not a loan. The Government has made it extremely hard to get a loan on a home without TONS of documentation and taking away the bankers choice to lend funds in a sense without passing the approval process the Dodd Frank and CFPB has put into place to "protect" the consumer. It is time for consumers such as yourself to stand up and voice your concerns because there is too much government involvement now!
Flag Thu Jan 14, 2016
I AGREE WITH DIANNE. IT JUST DOESN'T MAKE SENSE TO ME!! BUT IT IS ACCEPTABLE TO USE CASH TO BUY A HOME AT THE ASKING PRICE...... IF YOU HAVE THE CASH FOR A DOWN PAYMENT AND YOU ARE EMPLOYED AND OR RETIRED AND HAVE GOOD CREDIT YOU SHOULD STILL BE ALLOWED TO USE IT TO PURCHASE A HOME....THIS IS JUST ANOTHER WAY TO MAKE IT HARDER FOR HARD WORKING PEOPLE BUY A HOME.....
Flag Thu Jan 14, 2016
I
Flag Thu Jan 14, 2016
What is a DU?
Flag Thu Jan 14, 2016
At one we had a moral country - that is when we were actually a free people. Free to save and pay CASH - which is the way I brought up to think about things. To be able to save and pay cash was considered most admirable. Hmmmmmm!!! Banks have contributed to the mess we are in a BIG way!
Flag Thu Jan 14, 2016
You do not need to deposit your money into your account $2k at a time (like Darrell suggested).

Deposit it all at once into your ALREADY ESTABLISHED checking / savings account. Allow the funds to sit in the account, and have it reflecting on 60 days worth of bank statements - to be safe let it sit for 3 months.

All banks / lenders play by the same rules when it comes to conventional loans. All conventional loans require "60 days seasoning of funds" in an account. "Seasoning" is the mortgage term for "established funds." After you have 2 full month's bank statements showing the 100k balance, you simply need to provide that to the lender and you're good to go. I've been doing this for 15 years, and close over $13 million in loans per year (personally), so rest assured that i know what i'm talking about .

Steven K.
Badgerland Financial
608.370.6746 Ext.0720
6 votes Thank Flag Link Wed Mar 6, 2013
@cee betterchoice - funds kept on deposit at a financial institution reflect as liabilities on a bank balance sheet so what you're saying doesn't make sense.
Flag Mon Mar 21, 2016
Doesn't seasoning mean "put it in my bank where I (the bank) can earn interest on it for 3 months before I (the bank) will acknowledge its existence for the purposes of a loan? Doesn't that constitute a legal bribe for the bank?
Flag Tue Jan 19, 2016
If this guy deposits $100K in cash all at once I guarantee that the IRS will come knocking--and maybe seize it. Cash has become synonymous with illegality. Sad but true--our Big Brother has spoken. Honest people get to pay the price for the dishonest ones.
Flag Fri Jan 15, 2016
I have a question My husband family of 5. Instead of having 2 executors my mother -in-law just had her oldest daughter as the only executor. These children have such animosity for each other. My idea was to set up an account in her honor and give her money to the University she worked for. She was a professor teaching young men and women about nursing for 30 years of her life. After her retirement and before her retirement she traveled world wide to teach other nurses even Egypt. I had a wonderful life with her. She died 2 days shy of her 94th birthday this year. There has been know knowledge when the money will be dispersed. Not a word to explain to her siblings as to where she is at with this money. my husband and I want to help with setting up a liitle foundation for her. My mother-in-law had a few stocks when she passed. I was told that we can't carry on the stocks but has to be devidened amongst her children. Does the executor need to keep the family informed, or does she need to
Flag Thu Jan 14, 2016
Not an expert here, but be careful with any suggestion to deposit in amounts designed to avoid the federal reporting rules. It could be viewed as "structuring," which is a crime. Depositing the lump sum won't create a taxable event (assuming you've paid taxes along the way) and won't risk violation of structuring and laundering rules. Good luck.
Flag Thu Jan 14, 2016
You know some people don't like to put there money in the bank, I lost a house I wanted because I had to have seasoned money in the bank that I had been saving. You know they need to bring the amount of time down to at least 1 month. So thanks fo letting us lose our dream house.
Flag Sun Jul 12, 2015
Putting anything over $9,999.00 is documented and your name is sent in to the FDIC and IRS as the bank is required to do so. The main reason is money laundering not tax evasion but it will still be reported. Contact a financial advisor and see if there is any recourse other than depositing into a regular account.
Flag Mon Feb 17, 2014
If you put all of the money in at once, wouldn't it get reported and taxed???
Flag Thu Oct 24, 2013
I DONT TRUST PEOPLE OR YOUR CRONY CAPITALISM/BANKS ETC.

Then we dont buy! boycott everything then, shut this oligarchy down, get rid of the fed..

I believe that banking institutions are more dangerous to our liberties than standing armies.

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson
5 votes Thank Flag Link Thu Jan 14, 2016
Why do you blame the banking industry when all these problems are the fault of the Federal government? IT strangles our freedom by imposing the reporting rules on banks. You really think that the banks want this hassle?
Flag Thu Jan 14, 2016
Erm, so the banks don't mind that you have $100,000 stashed. They're not controlling you. They're not controlling your currency. You don't need to take power from them.

All that's happening here is, YOU are asking THEM for HUNDREDS of thousands of dollars. For them to feel comfortable giving you those hundreds of thousands of dollars, they want to see some history of where the money is coming from. That's all.

Thomas Jefferson
Flag Thu Jan 14, 2016
Awesomely said! And who is agreeing with them who is controlling, who gets to buy a home or own property... No one is supporting us when we go to them to buy, you are told of the rules...
Flag Thu Jan 14, 2016
Blue Bayou, unfortunately your funds cannot be traced to a source so lenders will not count large sums of untraceable funds. As crazy as it may sound there are people out there with drug , and other illegal money. Contact a reputable lender who can advise you best way to start depositing the money into an account that can be used in the future.

Also see about purchasing an Owner financing type property which may be willing to work with you, due to the fact they are not a typical mortgage lender.

Don't get discouraged, I am sure something can be worked out for you.

Good day,

Rob
4 votes Thank Flag Link Tue Jan 31, 2012
Here's my take on the situation...and, no, I have no expertise at all, this is just my two cents worth. Find out what the down payment will be for the budgeted amount you wish to borrow. Deposit ONLY that amount in less than 10000 increments (ex: 100000 loan requires 20000 deposit). Hopefully, you will have a good enough credit score to obtain a loan. It may cost you a little up front to process the loan. Then, after you get the loan, pay it off as you wish. Then, take cash to the bank to make your payments and pay say, double amounts weekly until the balance is paid. The bank WILL take the cash as payment. Please feel free to correct me if I'm in error.
3 votes Thank Flag Link Thu Jan 14, 2016
That is pretty much what I did and I just purchased a home in May, 2015. I only deposited what was required for the downpayment, closing costs etc. and nothing more.I had bank accounts at other banks that showed a 3k balance and I just moved that money to the bank where the mortgage was being obtained. The 3k had only been on deposit at my original bank for three weeks. Please see the advice of a professional lender or two.
Flag Thu Jan 14, 2016
That'd be a great idea if you want to violate federal law. Knowingly depositing less than $10k to avoid reporting is illegal regardless of where the funds came from. Deposit what you need for your down payment and not a penny more, pay down your loan with the additional cash as soon as you can, then refinance your mortgage to lower the monthly payment.
Flag Thu Jan 14, 2016
Nice reply, that sounds like the best advise on this matter...that's what I would have done!
Flag Thu Jan 14, 2016
Put it in the bank and wait three months. Most of the time when its in there that long they accept it as your money and then you can use it.
3 votes Thank Flag Link Thu Jan 14, 2016
The typical requirement a conventional or government loan is 2 months' bank statements, with large deposits being paper-trailed. If he opens an account with the cash today, the money will be documentable in about 2 months.
Flag Thu Jan 14, 2016
Consult with an attorney on best way to go forward before doing anything else and please tell no one else that you have a lot of cash in your home safe. A neighbor of mine was robbed via a home invasion initiated by his own nephew who knew about the safe.
2 votes Thank Flag Link Thu Jan 14, 2016
Do not start depositing small amounts. This will be flagged as structured deposits as pointed out by Robert from Roseville, CA and are illegal. A lot of these laws are the result of money laundering by criminals. An attorney should be able to advise you in the proper course of action so you can buy your dream house.
Flag Thu Jan 14, 2016
Reading all the gift comments. I was told the gift money still had to be either seasoned or traceable . I'm having the same problem. We are self employed and have a retail biz. My lender also told me we might need a co signer. Which is so funny because we have paid off 6 cars a home and have no debt. But we take full advantage of the tax laws.
2 votes Thank Flag Link Thu Jan 14, 2016
My advice would be (1) to not keep that much money in a home safe, unless you are packing some heat with you 24/7. There's people that will do you in for a nickel. (2) don't go posting on the internet about it, since if there's probably only one person in Alexandria, LA with that much moola, and it ain't gonna' take no genius to figure out it's you.
2 votes Thank Flag Link Thu Jan 14, 2016
Give it to a buddy, have them deposit it, then have them give it back to you. The banks don't want any competition, lol They want to see a paper trail.
good luck !
2 votes Thank Flag Link Thu Jan 14, 2016
Yeah, but you had better be able to trust that "buddy!"
Flag Thu Jan 14, 2016
Bad advice due to the $10,000 limit. The buddy might end up with a big tax bill too.
Flag Thu Jan 14, 2016
Why not purchase a prefab? These houses are quite nice. My mother bought a brand new prefab constructed to her spec for $75,000 in Coconut Creek, FL. The house was purchased with the proceeds of the sale of their condo on the beach which they could no longer afford. The money was deposited into their bank account and a Cashier's Check was drawn for the $75,000. In your case, you can go to the bank with your cash and ask to purchase a Cashier's Check for whatever the cost of the house is. The $75,000 was for a brand new construction, 2 bedroom, 2 bath. If you purchase used, the prices are much less. The drawn back was that the house was on leased land, but if you can purchase a Lot, you can have the house placed there.
2 votes Thank Flag Link Thu Jan 14, 2016
One thing bad about prefab houses is not buying the kit, but hiring someone to assemble the kit which can cost more than the kit itself. Here is one case:
http://www.nytimes.com/2012/04/19/garden/in-the-catskills-a-prefab-box-of-galvanized-steel.html?_r=0

she bought the house for $47k and to have it assembled, the total ended up costing her $260k. So be aware before buying something so cheap. Remember, "if it sounds too good to be true."
Flag Fri Jan 15, 2016
Darrell is correct Blue. Be careful of well meaning non professional advice on these sites. It is counter productive.

Have you applied for a loan at this point? You should speak to your loan officer/lender who will confirm that the lender's typically require 2 months of bank statements (that may vary depending on the lender, however of the last 12 homes that were financed that I closed, the lenders only required 2 months of bank statements). Be positive, it may just be that you need to postpone the dreamhome for 60 days. :-)

I wish you the best and hope you are sitting happy in your dreamhome soon Blue.
Regards,
Charlene Weston
Realtor/Team Leader
Weston Group
http://www.westongrouponline.com
2 votes Thank Flag Link Wed Feb 22, 2012
Blue if you are still watching this post apparently there is only two options for you.

1. See if you can purchase the home with a smaller down payment say like 5%. (hopefully you have some funds in a bank account) Then just get certified check made with your cash to do 5k principal reductions every month after you close to get rid of the mortgage insurance you be paying on a LTV above 81%.

2. Have a family member who already has the cash in their account do a gift to you of 100k to buy your home with. You can just pay back that family member your cash after the transaction closes.

That is your only two options based on the new lending guidelines in play today. If you need a lender to help make this happen contact me and I'll get you in touch with them. Daniel you were right on the issue of proof of income. My suggestions with the 2-5k a week would only clear up a deposit issue with the bank and not with the lender.
2 votes Thank Flag Link Thu Feb 16, 2012
George, the issue isn't the paying cash, the issue is paying cash for part of the purchase and financing. It's the banks that are getting in the way. I'm fairly certain if you bought a home with 100% cash you would have no issue whatsoever. You'd still have to take it to a bank for a certified check and it'd be reported to the government, but you wouldn't have an issue being able to do it. The reason these rules exist is to prevent private non reported loans. For instance, my parents loan me 50k for a down payment, and I tell the bank that it's my money with no strings attached. The bank gives me a mortgage I can't afford because they don't know I'm paying my parents $X.XX a month in addition to my mortgage to the bank.
Flag Thu Jan 14, 2016
I like this, now I have a question. If I am in a lawsuit, my neck was broken, and I aquire a large sum of funds. I am also on disability at the moment. I wish to purchase a home with a large down payment. Will my disability be in jeopardy and can I use my money to pay down on my new home as well without getting myself in trouble. Help! Concerned HPDc6
Flag Thu Jan 14, 2016
When did these new lending guidelines take effect? I know someone who came to the US and bought a home for cash.
Flag Thu Jan 14, 2016
This is best answer Of course you need a relative with 100K in the bank and willingness to not make any interest for awhile as they put money back into account and hope you can back it up legally!
Flag Thu Jan 14, 2016
again, the problem with undocumented income is just that, regardless how he enters it into his account, he cannot "prove" to the loan officer / underwriter that the money was illegal!

therefor, the money cannot be used
2 votes Thank Flag Link Wed Feb 15, 2012
Yet at the same time the damn Chinese can come over here with suitcases of cash and buy homes and those of us who have saved money from working a job for cash (tips, side-work, etc) can't! ! That is going on all around me where I live! In fact, they have driven the cost of homes up around here so unrealistically none of the hard working HONEST Americans can even afford them! And I dont think a person should have to "prove" anything when it comes from having cash saved up as long as they have a job from which it is likely to have been earned! My husband and I have up to thousands stashed all around the house because if (and when) the power gets cut from a storm, terrorist attack or zombie apocalypse everyone will be up ***t Creek without a paddle because all the money will be stuck in the banks with none functioning ATM's!
Flag Thu Jan 14, 2016
If you follow what the government is doing. They want to be able to track all money so that if they want to come and seize it they know where it is.
Flag Thu Jan 14, 2016
A real estate agent suggest that you "deposit....about 2,000 dollars a week for 50 weeks" Really?


And when the loan officer ask you for your bank statements, your w2s, your IRS reports and it becomes clear that you cannot explain where this extra 100 grand came from.....??

What next mr realtor?

I will tell you, LOAN DENIED!
2 votes Thank Flag Link Wed Feb 15, 2012
Funds must be "sourced & seasoned". Sourced means lenders need to verify where the money came from and seasoned means that money needs to be in your account at least 60 days. Standard procedure these days for all lenders.

If you are paying cash for the house then there is no need to worry but if you are financing then you will need to meet the sourcing and seasoning requirements. It's a good idea to keep that much money in a bank account anyway so that should be your first step. Next, talk to a few licensed loan originators that can tell you what your options are in your situation. I would recommend you work with a reputable mortgage banker or mortgage broker since they will have many options for you and have the know-how to structure your transaction correctly.
2 votes Thank Flag Link Mon Feb 13, 2012
For a four year old question (Jan 2012), this is getting a lot of traffic lately...


Cash would be fine to buy outright. It would be reported, but it would be acceptable.

The problem is using it as a down payment. The bank, by giving you a lot of money (in the form of a first mortgage for you, and as payment in full to the seller), expects to be first (and only) in line if you don't pay it back. They would take possession of the house in order to get their money back. That's the terms they're using to loan you the money in the first place, in deciding if you are paying enough down, what the interest rate should be to cover their risk, etc.

But if someone else loaned you the 100k to use as a down payment, now there is another party with an interest in the house. The bank doesn't have clear access to the whole value of the house, with another creditor claiming the house is security for his loan.

From a purely business standpoint, the bank doesn't care how you earned the money. As long as you earned it, and it's not a hidden loan that causes them to not have the security they were led to believe they had.



I hope you were able to work out a purchase four years ago. :-)
1 vote Thank Flag Link Thu Jan 14, 2016
I think the key point being missed is the fact that you indicate you are a "disabled" retiree. That being said, there are laws governing how much you are allowed to have in a bank account. If that is so, then I understand why you kept your money in a home safe.

You do need to sit down with a professional, whether it is an attorney who specializes in wealth management or a mortgage lender or a financial advisor. There are professional people who are familiar with the restrictions regarding money sourcing who can give you the best advice for your particular situation. Use them and stay away from the Internet for your answers. You have provided just enough information about the money and not nearly enough regarding the hows or whys for your situation. Seek competent professional advice and follow it. You can still own the home of your dreams, and get through the legal aspects without very much trouble.

Good luck in your quest.
1 vote Thank Flag Link Thu Jan 14, 2016
Put the money in 11 accounts at different banks and to keep the money in there long enough to have it seasoned money.
1 vote Thank Flag Link Thu Jan 14, 2016
Get a cashier's check for the $1K and offer it to the seller; then ask seller to finance the balance of the mortgage ------- then get a different broker and bank.
1 vote Thank Flag Link Thu Jan 14, 2016
some great replies, I'm just frustrated when it notes that currency is LEGAL tender for ALL debts public and private, so would seem to be against Federal law if not accepted. If that's not the case, why is that on bills any longer?
1 vote Thank Flag Link Thu Jan 14, 2016
It is to borrow more money, you can buy house outright with cash, if no bank is involved. Don't want to follow the banks (and governments) rules? Don't borrow money. Otherwise, gotta play the game like everyone else.
Flag Thu Jan 14, 2016
PS: Darrell absolutely does NOT know what he's talking about (no offense Darrell). His way will get you into a home in about a year. My way will work - it's done all of the time - and you can own a home in about 60-90 days.
1 vote Thank Flag Link Wed Mar 6, 2013
At least here in Canada if you deposit the money in the bank, you olny have to show 90 days of history. As long as there are no large deposits put in durring that time no other questions are asked. Hopefully the home you want is still available.-
1 vote Thank Flag Link Fri Feb 22, 2013
If you can account to where your money came from as in reciepts . the government has to have Paper trail then you can depoist it with the bank and bring certified funds as in a cashiers check.
1 vote Thank Flag Link Thu Jan 10, 2013
Well, Blue, you know it wasn't a good idea to sock that money into a safe in your home; you probably cost yourself $30,000 in interest not putting it in a bank.

As noted below, underwriters need to verify that the down payment money isn't borrowed, and you can't provide that verification from the safe. So you will have to break down and put it in the bank, which will cause another round of inquiry, but you can get past that.

The good news is that the real estate market appears to be stable, so another dream home may be on the horizon.

All the best,
1 vote Thank Flag Link Wed Feb 22, 2012
What a bunch of idiots.
Flag Thu Jan 14, 2016
$100K, deposited over DECADES (as was tated), would have earned at least $30k in interest.
Flag Thu Jan 14, 2016
Please tell us how you can get $30K in interest from only $100K in principal!!!
Flag Thu Jan 14, 2016
Daniel, we are sort of talking about two different things.

You are talking about the ability the income Blue makes or made rather was earned through legal means and was taxed and documented. I understand that concept, but Blue is a disabled retiree. His income is either his retirement, pension, dividend yields, or disability checks. All of which is or can be proven and documented.

The down payment was the issue because on an underwriting standpoint funds can't just show up in an account. However, if they were already in his account before the statements were pulled it would not flag anything. According to my source as long as his 100k in cash was in his bank account for at least 60 days it would not matter how he got them, but rather that it were already there to begin with. Like I said I am verifying this through underwriting, but so far 3 different lenders have told me this.

A lender is not going to try and seek where funds already in an account came from outside of that 60 or 90 window. What they are looking for is a pattern of what is coming in vs what is going out.
1 vote Thank Flag Link Wed Feb 15, 2012
Daniel, I'll give you the 2k a week for 50 weeks was not the best, but it was only part of my answer off the cuff. Thinking about it more I'd revise my answer and say to go ahead Blue and just deposit the whole amount into your checking account. There may be an IRS form you will need to fill out with the bank. Ideally after 60 days a lender could allow that for your down payment. I am having my loan officers underwriter check into this for clarity. They might be able to fund your loan. In the meantime have your agent amend your contract to extend the closing date so you still stay in contract on that dream house you want.
Web Reference: http://timetomove.biz
1 vote Thank Flag Link Wed Feb 15, 2012
You should contact several realtors and ask them to recommend a few loan officers that they have a work history with. They will be happy to do so. The reason I suggest that you work through realtors is that they have a history with loan officers and do not want to work with loan officer that cannot get the job done. Once you have some recommendations, call the loan officers to discuss your situation. I am sure several will be able to help you find a way to use this money to buy your home. Good Luck!!!
1 vote Thank Flag Link Wed Feb 15, 2012
LOL, please do not listen to realtors. (There are over 20 ways to finance a home") really?? do tell!


Your mattress money is undocumented! How does the bank know that you did not borrow the money from Lou the loan shark, or that you received the funds thru illegal means or that you have been skimming cash to avoid paying taxes??
1 vote Thank Flag Link Mon Feb 13, 2012
There are over 20 ways to finance a home. If the bank you are dealing with has a problem, you have a choice, meet their seasoning demands or find another financing option.
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These are all safeguards in place to prevent money laundering. A lot of illegal money can be laundered through significant real estate purchases and exchanges. These safeguards have driven laundering activity to cash dominated businesses...not real estate.
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Work with your multi-dimensional real estate professional for alternative financing or stick the money in the bank and dance to the banks tune. (NOTE: Don't dump it into the bank in one $100K deposit.) Meanwhile, research with your agent how placing your $100k into a Roth IRA can add significant value while you wait out the seasoning requirement.
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Best of success,
Annette Lawrence
ReMax Realtec Group
Palm Harbor, Fl
727. 420. 4041
Web Reference: http://www.MyDunedin.com
1 vote Thank Flag Link Mon Feb 13, 2012
Hi, Most likely because the bank needs to verify where they down payment has come from. Even when it is gifted a gift letter needs to accompnay. Your best bet is to deposit the money and let it sit for awhile if there is no other solution offered by the bank. It's hard not being able to do whatever we want with our money.

Chris
1 vote Thank Flag Link Mon Feb 13, 2012
What does your lender tell you about this situation? All money needs to have a paper trail to prove where it came from.

I think it's great that you were able to save up all that money, and I understand why you wouldn't want to put it in the bank. That said, the rules apply to everybody.

Good luck to you!
1 vote Thank Flag Link Mon Feb 13, 2012
Blue Bayou,

I agree with Rob. It can most likely be worked out. I am working on one right now that has the same issue and it needs to be in a bank account for not less than 60 days (called seasoned money). However, the amount I am dealing with is not even close to what you have, so not sure if the same rule will apply.

Check back periodically to this site. I'm sure that there will be a lender along soon that can be more specific on what you need to do.

Good luck!
1 vote Thank Flag Link Tue Jan 31, 2012
Many part time workers from abroad deposit cash in Safe Deposit Box in bank. They somehow bring/send the accumulated cash to the outside of US before transfer the money (as a gift) ($ from their relatives/family account to US bank and buying house without issue. So try to make the cash as a gift from others.
0 votes Thank Flag Link Sat Mar 19, 2016
I would just but a bunch of gold with the money and then sell it. You can then show the bill of sale from the gold and a copy of the check you got for it as proof of where your money came from...
0 votes Thank Flag Link Tue Mar 8, 2016
My thinking is screw the people that want to make up these silly rules and buy from home owner that will take your cash and let these real estate agents and manufacturers go broke with their silly games. If they don't want to sell you a home because of some paper trail law that they came up with, again, buy from someone who want to sell regardless and you will get your dream home . I did and I didnt even have to go through the bull crap these agents try to hand you. Look at it like this, it's their loss, not your's.
0 votes Thank Flag Link Wed Feb 17, 2016
p.s. Not every selling home owner needs to see a paper trail when they are selling their home outright. Only agents and manufactures want to see this information, because they think they are going to cut down on money laundering, or, whatever other criminal stuff that can be done. It's just like gun control, people are going to get them anyway rather they like it or not. With your cash, if the home owner owns his home in the fullest, you can give him your cash and go straight to the deed and title office and make the transfer with the home owner and pay for the transfer of ownership. I would let none of these people you can't do it like that, they would be lying.
Flag Wed Feb 17, 2016
I know this thread is a bit old however I wanted to share the current guidelines for any new buyers that are currently facing this same challenge. I will admit is using cash to buy a home when applying for a loan is not ideal it is not always unacceptable. Many lenders or loan programs do not allow for the use of cash for many reasons including but not limited too, loan guidelines, secondary market restrictions, anti money laundering etc. However in some cases cash can be used if accepted by the lender and loan program when properly documented. I have copied and pasted the current FHA guidelines in regards to this situation. So can may be accepted in some cases. This can be found on page 228 of the pdf actual page 226 of the FHA 4001 handbook effective 9/14/15 please note FHA can change these guidelines at any time, I DO not work for or represent FHA.

(B) Cash on Hand (TOTAL)
(1) Definition
Cash on Hand refers to cash held by the Borrower outside of a financial
institution.
(2) Standard
The Mortgagee must verify that the Borrower’s Cash on Hand is deposited in a
financial institution or held by the escrow/title company.
(3) Required Documentation
The Mortgagee must verify and document the Borrower’s Cash on Hand by
obtaining an explanation from the Borrower describing how the funds were
accumulated and the amount of time it took to accumulate the funds.
The Mortgagee must also determine the reasonableness of the accumulation based
on the time period during which the funds were saved and the Borrower’s:
? income stream;
? spending habits;
? documented expenses; and
? history of using financial institutions.

Currently based on the Fannie Mae Selling Guide effective 12/15/15 cash on hand is not acceptable please see copy and paste of guideline listed below found on page 476 of the pdf which is also the page of the guide.

Cash-on-Hand
Cash-on-hand is not an acceptable source of funds for the down payment or closing costs.

I currently only finance properties in Florida however if you need a recommendation in another area I may be able to help.

Best of luck!
0 votes Thank Flag Link Thu Jan 21, 2016
Folks: The OP posted this question 4 years ago. I understand that some general answers may still apply to someone who finds themselves in a similar situation, but I'm almost certain that THIS guy's worked it out by now. :o)
Flag Fri Jan 29, 2016
Buy house for 100,000 with no loan or keep saving.
0 votes Thank Flag Link Tue Jan 19, 2016
Have a conversation with your Bank Manager regarding the situation. They understand the laws, and should be able to provide a solution. There is nothing wrong with depositing it all at once, but you should let your Bank know well ahead of time. This way they can make any necessary arrangements for security or shipping. Bank branches are usually held to conservative cash on hand limits, so it helps to plan ahead.

The Bank Secrecy Act (BSA) establishes a reporting requirement for cash deposits or withdrawals in excess of $10,000. This rule was created to trace funds which were obtained illicitly, being laundered by drug dealers, or being used to support terrorism. If your cash was obtained legally, you have nothing to fear with the reporting rule, but the Bank needs to know the source of funds.

Any suggestion to deposit less than the $10,000 limit multiple times is bad for 2 reasons. First, there is a rule in BSA against structuring transactions, which is making transactions deliberately in lower amounts to avoid reporting. So even if your money was obtained legally, structuring the transaction is illegal. Second, bank computers now use algorithms which track patterns of cash transactions to uncover suspicious activity. If your banks' computer uncovers your structuring activity, and it will, the bank will probably close your account.
0 votes Thank Flag Link Tue Jan 19, 2016
I never knew it wasn't. I would speak to loan officers and find out exactly what to do. Also, I would get advice from a lawyer that understands real estate and disability claims.
0 votes Thank Flag Link Tue Jan 19, 2016
just curious, how can you be "disabled" and a retiree at the same time? were you working at a job, while you were disabled? how can one on disability save $100,000 while another entity is paying for your living expenses? Is being on disability that lucrative? you must have had a mighty fine disability income to be able to pay living expenses, not work and save that kind of money. Just wondering...do not mean any disrespect of your disability, but working people all over would love to know your secret to success since we are being told we can't financially retire until age 70. I would love to be retired at age 57....
0 votes Thank Flag Link Sun Jan 17, 2016
Sorry this rule is to stop money laudering Even outing in the bank may be hard
0 votes Thank Flag Link Fri Jan 15, 2016
Take a little of that cash and get yourself to a lawyer and get some sound advice on how to keep from drawing the attention of the government thieves. As for some of the posters here, what a bunch of tools. The government has gone off the ropes in it's belief that all Americans need to be treated like criminals. Yet we lie down like doormats and approve of that. Especially the comment that anyone with as much cash as you have must be involved in illegal activity. Maybe he needs to learn how to budget. So get yourself to a lawyer. Or, find yourself someone willing to sell to you on a land contract and just dole your money out to them over time. That's how I bought my first house 40 years ago, even though I had the cash to pay for it.
0 votes Thank Flag Link Fri Jan 15, 2016
Money purchases at about over $5,000.00 must be documented.
(Unless our government has revised this figure up or down at some point.)
With real estate purchases there can be more than one reason.
If you've been saving your dollars in a bank account over time, it proves
and documents it is truly yours.
A. You did not obtain it suddenly from outside sources. IE: Money laundering.
B. It further can prove that you did not borrow the funds from a third party.
IE: Family member or friend.
C. Most importantly by having the funds documented it proves they are truly
your own personal dollars. It further proves you do not have a personal
agreement with any other third source that you owe this money for the
soul purpose of purchasing your home. Thus proving there is no cloud on
the property. Your title is free and clear. Any financial institution or other
individual lending you money in the future would clearly be in first position
as a lender.
Florence Ross
1-800-803-0159
0 votes Thank Flag Link Fri Jan 15, 2016
Money purchases at about over $5,000.00 must be documented.
(Unless our government has revised this figure up or down at some point.)
With real estate purchases there can be more than one reason.
If you've been saving your dollars in a bank account over time, it proves
and documents it is truly yours.
A. You did not obtain it suddenly from outside sources. IE: Money laundering.
B. It further can prove that you did not borrow the funds from a third party.
IE: Family member or friend.
C. Most importantly by having the funds documented it proves they are truly
your own personal dollars. It further proves you do not have a personal
agreement with any other third source that you owe this money for the
soul purpose of purchasing your home. Thus proving there is no cloud on
the property. Your title is free and clear. Any financial institution or other
individual lending you money in the future would clearly be in first position
as a lender.
Florence Ross
1-800-803-0159
0 votes Thank Flag Link Fri Jan 15, 2016
Wow, it sure is disheartening to see the number of people whose first advice is to do something to evade the rules.
....and it's even more disheartening to see that condition of our government where an honest person saving modest amounts over the years - as we're taught is the right thing to do from a very young age (when did you get your first puggy bank?) - gets in trouble for doing exactly that. The twentieth century set up the ruination of the species, IMHO.
0 votes Thank Flag Link Fri Jan 15, 2016
Forgot one last thing, THANK YOU FOR YOUR SERVICE TO OUR COUNTRY!!!!

ROLL TIDE!!
0 votes Thank Flag Link Fri Jan 15, 2016
Unfortunately banks are required to notify IRS for cash deposit/withdraws @ 5K.
Check and make sure there is no early pay-off penalty in the contract. Put minimum down payment and get the loan. By the 3rd or 4th month write a check for the monthly payment and a separate check for the principal. Make sure you write on that check "principal only". Choice: put 4k a week in deposit and write a check for that 16k a month as "Principal only or wait until all 100k is deposited to write the "Principal only" check.
0 votes Thank Flag Link Fri Jan 15, 2016
In most cases tellers would alert authorities of unusual cash transactions. Unless, you have had and still have a good relationship with your bank. I had no problem with my Bank in doing this, I have been with them for 25 yrs. I have a good relationship with them.
Flag Fri Jan 15, 2016
Put the money in the bank. Open a savings account and leave the money there for 3 months. It is insured because it is less than $250,000 so your money is safe. Then when you apply for a mortgage you will have 3 months of bank statements to show the mortgage company (which is also a bank). That's the only way. You cannot "borrow" down payment funds that is one of the questions they ask on the mortgage app; and the bank will not lend to you if the down payment is borrowed. There's your free legal advice for the day.
0 votes Thank Flag Link Fri Jan 15, 2016
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