On The Beat 8/24/20 - JTS and Company

On today's On The Beat, Jeff Farnham joins us today to talk about cash down payments and cash deposits.

Midday slate troy thompson: welcome to on the beat everyone.

I'm troy thompson.

Joining me, the man himself, of course, mr. jeff farnham from jts and co, mortgage professionals.

How are you my friend?

Nice to see you again.

Jeff farnham: yeah, i'm doing well.

How are you doing?

Troy thompson: i am fantastic.

All right, today we're talking about cash down payments and cash deposits.

Okay?

Can you explain the vetting process when it comes to getting an actual loan?

Jeff farnham: yeah.

So there's this mistaken identity and we see this quite a bit in the south, that people put money into a safe at home, or what's called mattress money, they've got in their sock drawer or wherever they keep that.

And some of that's because they're just not comfortable at banks or wherever it may be.

So they think they can just pull out a wad of cash and use that as a down payment in the transaction.

Jeff farnham: and you just can't do that.

We've got, in a mortgage transaction, and what's happened over the years that due to anti money laundering laws and those kinds of things, we have to vet that money.

Where did it come from?

We're looking for a couple of things.

One, is there another loan out there that they took out that maybe hadn't reported on the credit bureau?

Did the money come through illegal means?

Those kinds of things.

Jeff farnham: so using mattress money or cash money that cannot be verified can not be used in a mortgage transaction.

Troy thompson: interesting you said that.

We have a question from one of our viewers, if you wouldn't mind.

Is it acceptable to use cash to pay for your closing costs or cover a down payment of your loan?

Jeff farnham: all right, so from a closing call standpoint, so if you wanted to pay for your credit report or your appraisal, those are small cost transactions.

Credit report's around $40, appraisals around $500.

So yeah, you could pay cash for those things, right?

Jeff farnham: a down payment is a little... if you could fully verify the cash, where it came from, sourced it and seasoned it, then you could use that.

But it's very, very difficult to do that, large sums of money like that.

The other issue you run into, most closing attorneys are not going to accept cash in the transaction.

They're going to want a certified bank check or a wire, something along those lines.

Troy thompson: interesting, because we've talked about this before.

I've been putting money into a savings account for a deposit, but i still consider that a cash deposit.

Can you explain what the actual concept of a cash deposit means?

Jeff farnham: all right, so putting money into your savings account over a period of time is acceptable.

So there's a term called seasoning of the money.

And that refers to if the money has been in your account for 60 days or more, then it's considered seasoned.

So it's fully verifiable.

So if you had come across $1,500 in cash 90 days ago, and had put that into your bank account, and you're closing on your transaction 60 days or more later, then that's acceptable.

You could use that.

If you deposited $1,500 in there last week.

And let's say you did some work for someone, but you couldn't verify that.

That would not be acceptable.

If you sold a motorcycle and had a bill of sale and a copy of the check, or something like that.

Then yes, you could potentially use that money as part of your down payment.

Troy thompson: all right.

Another question from one of our viewers.

What are some incredible or verifiable sources of cash deposits?

Jeff farnham: okay.

So we need to probably change the term from cash deposit to large deposits or unverified deposits because sometimes it's cash, sometimes it's in the form of a check, right?

That sometimes you got a tax refund, for example, came in.

That's a verifiable source, easy to track, trace.

You can use that.

If you've got a bonus from work and they paid you in a check, you could use that.

That's no problem.

A gift from a family member is acceptable.

There's certain procedures we go through to verify that.

Jeff farnham: but $300 here, $800 there, $2,400 there with no way of verifying that is not acceptable.

And you may say, "well, i cut someone's yard and they paid me in cash."

Well, that's great, but i can't verify that.

So i can't use that in the transaction.

Troy thompson: i get you.

A follow up question from our last viewer.

Can you immediately use that money, along with the prior money in your account?

Jeff farnham: only if i can verify and source it, right?

Again, if i can't verify and source it, we cannot use it.

Troy thompson: interesting.

All right.

Well, we appreciate you as always, jeff.

Jeff farnham: yeah.

Glad to do it.

Troy thompson: if you want to find out more information about the future of your new home, there it all is up on the screen.

Jts and co mortgage professionals.

They take care of all your financial needs when it comes to purchasing your new