Large Deposits Explained: What’s Allowed and What’s Not

Hey guys, welcome back to another week of Mortgage Matters in Minutes. I'm your host Brett Rasmussen, owner of Mortgage Specialists. We are so close to our 200th episode, which has been over four years in the making. And it's exciting to see that we continue to make things better and still come at you with many times new information. I think in the past we talked about large deposits, but if we haven't, it's probably one of the biggest things that causes delays and/or causes the biggest stress for clients throughout the mortgage process. So, as a reminder again, if you are a local real estate agent here in the community and want to know something, reach out to us, ask a question, drop us an email, put a comment below, subscribe to our videos, and each and every week, we'll try to come to you with some relative, I'm sorry, relevant information. again, that's pertinent to the real estate market when it comes to mortgage lending. As we brought up last week, we don't do any retakes. So, there's a perfect example of using the incorrect word. And if you go back to some of our previous videos, there are some trolls out there that like to find when we use the incorrect word. And again, I've never portrayed to be an English major nor a you know, professional speaker. Even though I do professionally speak, I do make mistakes like any human. So, let's get to the material. Large deposits today. Let's chat about what that is, what's allowed, what's not allowed. So large deposit again can be a very general word, but what's the real reason we're talking about large deposits? The process wants to make sure there's nothing illegal going on, that there's some unique scenario hidden behind the deposit where a large deposit is typically outside your normal activity. So, if you're gaining a normal amount of paycheck, usually the rules are is 50% of your qualifying monthly income. Anything over that is a large deposit if that might be reoccurring or it could be a lump sum one time. I've seen the writers ask for as little as 25 or 50 bucks they consider to be because it happened regularly quite often where there's lots of reasons fraudulently and money laundering reasons why those are being asked for where the average consumer obviously is not committing any kind of fraud or anything but that's the reason why they're asking for it. They want to double check to make sure you're not going to borrow money somewhere else to use that money for the mortgage loan or you're not doing something illegal or getting cash out of your safe to deposit into your bank account to use that for the transaction. Because there are a lot of money launderers out there that do use real estate to clean their money. Meaning, if you're in a business that only does cash, drugs, you know, you name it, whether it's prostitution, whether it's illegal international drug smuggling, whatever. There's lots of examples out there, but in order to turn that cash into a bank, into the system, you have to clean it, meaning you have to push it through. And that's what they're trying to stop and review and catch is possibly any of these scenarios. because what they have found is that if those are some kind of illegal scenario, many times those loans don't get paid back. And I can say here in the Omaha area when we're working with clients, I've yet to ever see anything that's on any kind of a fraudulent scale or largesized international or anything of any massive cash situation basically. So let's get back to it. Why do they scrutinize it? just as we mentioned, but what are general rules that are allowed? You know, if we can validate where the money came from, like you sold some stocks, you received a bonus or commission, large check at work, you sold some kind of asset that we can paper trail through accounts, those are legitimate reasons. Those are not considered large deposits. But when it just says general deposit showing up and money is in your account, underwriting is going to ask where that comes from. And we have to show the source. If that comes from another bank account, fairly easy. Send the bank account over. But many of times people have multiple accounts and they're moving money through in different ways and they're reimbursing friends through PayPal and Venmo and Zelle and you name it. And so many times this money that's cut and put through their account is gone through all different kinds of accounts, which makes it frustrating for the borrowers that are trying to get a simple loan, which believe me, we deal with it on every single loan, every day of the week, and we detest it just as well as you do. But unfortunately, it's the world that we live in, and it's the paperwork that we have to do. So, what we tell clients is a couple things. If you are making a large deposit, document it. Save the paperwork. Save the transfer statement. Save as much paperwork as possible. It'll come up later that you can just show what occurred or deposit the moneys in advance, more than 60 days before you talk to a mortgage lender for us to see that deposit. We don't have to deal with it if it's 6 months or a year in the past. or if it is some kind of a gift or whatever it is, talk to your mortgage loan officer and we could be that person for you and answer the questions on what's the best way to get this money into your account and use it with a proper paper trail. That's the key is having a paper trail. And what gets delayed in the loan is when people don't have that paper trail, don't remember what the money was for, or it is cash or something else like that. That certain rules will not allow us to use those large deposits. So hopefully today you got a little bit of understanding of what a large deposit is. And it can be as little as a few hundred bucks or hundreds of thousands of dollars, but underwriting is going to review those statements. the more you can be prepared for that and the more you can have the documentation to show what it is, the easier the loan will go through your process. So, I'm Brent Rasmussen, owner of Mortgage Specialists, also a licensed mortgage loan originator here in Nebraska and Iowa. Love to help assist with any of your clients get preapproved or answer any mortgage questions throughout time. our phone number to our office 402-991-5153.

Check us out at our website at mtg-specialists.com. Have a great rest of your week and we'll see you here next time.

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