We hit this often but it is the cause of so much confusion and delay that we are addressing it again.

Lenders need to carefully estimate how much cash will be necessary to close (for closing costs, reserves and down payments), and they need to fully educate borrowers in regard to “cash to close.”

Most importantly – borrowers must identify exactly how much money they will bring in to close, and exactly where it will come from (which accounts or which donors if the money will be a gift).

Underwriters underwrite files based on the exact amount of cash identified on the loan application and in the original file submission. If anything changes during the closing period, the file has to be re-underwritten no matter what.

Borrowers need to understand this; they often dredge up cash during the closing period from sources not identified in the loan file, or they come up with amounts that are not consistent with the loan app. This causes enormous delays.

Borrowers also need to remember that all cash has to be paper-trailed to either seasoned funds or gifts.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646

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