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Cash Assets
Thirdly, after looking at your credit and capacity to repay, a lender
will want to ensure that you have enough cash assets to cover
closing costs and other related expenses such as moving. Not only
will you have to show the funds, but you also need to show the
source as well.
Funds can be borrowed to take care of your downpayment and
closing obligations. Most lenders will only allow secured loans from
an IRA or your 401K. Any unsecured loans taken will be considered
in the calculation of your debt-to-income ratio.
You can also use funds given to you as a gift. Any such gift must be
accompanied by a “gift letter’ signed by your donor. The letter
must state the money is a gift, and repayment is not expected. Gift
can be given by:
◊ An unmarried partner
◊ Religious nonprofit
◊ Friends
◊ Relatives
◊ Your employer or labor union
◊ Charitable organizations
◊ A government agency or public entity that provides such
assistance
Lenders will also want to see verification from the donor. This will
be a check, deposit receipt and bank statement that shows the
donated funds.
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