The problems with CASH in a mortgage

Trying to utilize hard cash during a mortgage process is something I get questioned on quite frequently.  Unfortunately it is impossible to use in probably 90% of the case.  Here are two examples of when you could and could not use cash:

Example 1: A borrower has been saving up cash in a safe at home for years.  They have $5,000 in cash in that safe and want to use it for the purpose of buying a home.  Unfortunately in this case they could NOT do this.  There is no paper trail or evidence of where the money came from.

Example 2: A borrower has a car and they sell it.  They make out a bill of sale and make copies of the transfer of title from them to the car’s buyer.  The buyer pays them $10,000 in cash and they deposit this money into the bank.  This money is documented and could likely be utilized.

Typically when I have a client who has a large sum of cash without a paper trail of where it came from the only way to utilize the money is for them to deposit it in the bank and wait for approximately 3 months until they have two consecutive bank statements that do NOT show the large deposit of cash.  Then the money is considered seasoned and usable. Please note these rules relate to the US Patriot Act to prevent money laundering and are considered “red flag” items that financial institutions are required to look for.

If you have any questions about utilizing cash in a mortgage transaction or any other mortgage related questions please reach out at 910-250-8888.

As always, if you have questions about mortgage guidelines, terms or rates please call/text me at 910-250-8888. I proudly serve the Wilmington, Leland, Hampstead, Jacksonville, Southport areas and am licensed in all of North & South Carolina and Virginia!
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