Using Mortgage Seasoning to Purchase an Omaha Home

What is Mortgage Seasoning?

Seasoning, when it comes to a mortgage loan, is a term used to describe how long money has been in a borrower's account. Seasoning is used most often to look at monies allocated to make a downpayment on a home purchase. It is also used for assessing closing costs and any other out-of-pocket expenses a buyer may face when purchasing an Omaha home. 

When a lender looks at how "seasoned" a buyer's funds for a home purchase are they are looking at how long the buyer has had the money. They want to see that the cash a buyer has available to use for a home purchase has been in an account for a specified amount of time and that the money was not recently acquired and placed into a savings account. 

Seasoning helps a lender to determine how financially sound a potential borrower is. Money that has been in an account for a longer period of time communicates less risk in a borrower's ability to pay the low and a lesser risk of fraud. 

What is the Seasoning Requirement?

If a lender wants to see that an Omaha home buyer has had money in their account for longer than just a few days. How long is ideal for money to be in a savings account? What is a seasoning requirement?

Most often a lender is going to look for the funds to have been in a borrower's account for at least 60 to 90 days. Keeping down payment money in your account for 2 or 3 months before applying for a mortgage home loan means that the money is seasoned. This money is seen as legitimately a possession of the loan applicant. This time period also gives time for any loans a potential buyer has taken out to appear on a credit history report. This gives an added layer of proof that the money was not borrowed from another lender. 

The exact number of days or period of seasoning a lender will require depends upon the specific lender and the type of loan you are seeking. It can also depend upon a borrower's financial health and history. 

Why Do Lenders Use Seasoning?

Abiding by seasoning rules helps lenders establish the creditworthiness of a potential Omaha homebuyer. Using seasoning as a launching point in the underwriting process helps a lender avoid the likelihood that they are stepping into mortgage fraud or lending money to someone who has obtained money for a home purchase in a manner that is illegal. Seasoning also helps to determine if a potential borrower has financial stability. Any measure to determine how solid a borrower's finances are is another measure in helping to determine the likelihood of loan default. (though there is no 100% guarantee). Lenders have strict laws in making sure they have made steps to ensure a buyer can afford a home purchase and make loan payments within their affordable budget. 

If you are considering the purchase of a home in Omaha, I can help. Please contact me at any time with any Omaha real estate needs.