The most common asset issues have to do with seasoning, and with reserves. Seasoned assets are funds that are deposited in your account for at least 60 days. Generally, if you are purchasing a home, a lender will want you to have 5% of the purchase price in seasoned funds but, as always, there are exceptions. Lenders do not want to see any large unexplained deposits into your account or they become concerned that you may be borrowing money, taking on additional debt that has not been disclosed on the loan application. You can provide two months of statements to demonstrate a consistent seasoned balance, but there should not be any large deposits on those statements, unless they can be explained to the lender. Nowadays, lenders are much more liberal with allowing substantial gift funds from a family member, which do not have to be seasoned.
Reserves are the funds that you will have after the transaction is complete, whether it is a purchase or refinance. Depending on the lender and the loan program, reserve requirements will be based on one of three criteria:
The lender will want you to have a certain number of months of that amount in reserve. Keep in mind that lenders will count only 70% of your retirement assets toward the reserve requirement. You need to let your lender know very early in the process if you are self-employed and planning to use funds from a business account. Also, some lenders will allow you to use the cash you are taking out in a refinance or from a home equity line for reserves, others will not.
