Profile picture for Holtoff

Can one use cash as a downpayment

For the past 5 years I have been paying fairly low rent for a small 2 bdrm half of a duplex.  Now came time to expand my living space inside and outside of the house. During my rent period I have accumulated enough physical gold to put a 20% downpayment on a good size house. I am starting to liquidate gold and cashing checks.  My understanding is that one needs to keep money on an account for 2 months for the funds to season. I thought cash would be a simpler option so long as I keep the receipts of my gold sales,  Am I missing anything here?
  • July 12 2012 - US
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Answers (9)

Profile picture for howardft
Yes, the funds need to sit in an account for at least 30 days. I would contact a local lender to get more details. 
  • July 13 2012
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Profile picture for Holtoff
Thanks everyone.  The loan officer I spoke to told me to keep the receipts of gold sales, which should eliminate the necessity for seasoning. Otherwise, money needs to sit for 2 month on the account to be considered for a downpayment.  I was just curious if I understood him correctly and perhaps someone on this board had an experience of dealing with similar set of circumstances.  I am going to call again to clarify.  Thanks again for all the info.
  • July 13 2012
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Profile picture for Ofe Polack
Discuss this issue with your mortgage broker, he/she knows what you should do to ensure their underwriter's requirements.  Good luck! 
  • July 13 2012
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Profile picture for Cindy Quinton
Yes, ideally you would put the funds into an account at least 60 days or a minimum of two bank cyles prior to closing. The problem is that the lenders want to be sure that it is not a loan of any kind, and is also not some kind of seller inducement to buy. 

This link discusses selling personal property to acquire a down payment. Selling Valuables

This article in the OC Register discusses gold specifically. Basically it says that the lender may ask for proof that you owned the gold at least 60 days. OC Register  

Amanda, just for clarification can you explain the reference to 3.5% down and being a first time homebuyer? I was under the impression that most FHA borrowers could pay the 3.5%.
  • July 13 2012
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Yes, you are right.  You need to 'season' the money/gold that you have saved up for at least 2 months.  Even though you do have receipt of the purchase/sale of the gold.  All lender require this time frame.  However it's best to consult with a mortgage professional for more specific details.  If you don't have a mortgage professional to speak to, I can direct you to an excellent mortgage professional that can advise you further. 

If you are a first time home buyer, you will only need 3.5% down payment.  But paying a higher down payment will lower your monthly payment.
  • July 13 2012
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Profile picture for wordsmth
Check with the loan officer. But definitely keep your receipts. The thing is, the underwriter really wants to know where the money's coming from. It really doesn't matter if it's been in a savings account, or if you've sold stock, or if you've sold some gold. But they need to know where it's coming from and that you've had it all along.

Hope that helps.
  • July 13 2012
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Profile picture for sunnyview
When I bought my first house, I had a smaller amount of cash that I wanted to contribute to escrow, but was told at that time that they needed to see it sitting in an account for 30 days. Things might be different now, so I would ask a lender since the amount is the bulk of your down payment.

There is some information in blog discussing seasoning of mortgage funds that might be helpful and maybe one of the smart Zillow lender will reply here too. If not, I would post this question and ask about seasoning periods for cash under Zillow's Mortgage heading in Advice so the lenders can reply.
  • July 13 2012
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Profile picture for Holtoff
So the funds do need to season? Or by having cash on hand I can avoid the whole seasoning piece and not have to wait for 2 months?

Thanks
  • July 13 2012
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Profile picture for sunnyview
I don't think that you're missing anything. You should definitely save the sales receipts for your gold sales just in case you need to show the trail of assets, but once you season the money, you should be fine. If you are working with a lender, I would ask them if they have any suggestions.
  • July 13 2012
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