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Fannie Mae Acceptable Sources of
Cash Reserves when Purchasing or
Refinancing a Primary Residence
 

When purchasing or refinancing a primary residence, lenders want to make sure that borrowers have some money left over after the closing has occurred. The cash reserves are usually two months based on your total mortgage payment, including taxes, insurance, PMI and association fees. Here is a list of the “acceptable” and “unacceptable” cash reserve sources.

Acceptable Cash Reserve Resources

  • Anticipated savings – If planning to save money before closing, the estimate for a borrower’s anticipated savings must be realistically developed. To calculate potential saved funds, the lender should reduce the borrower’s expected after-tax income for the expected savings period by existing housing expenses, monthly debt expenses based on data from the credit report, and expected living expenses, such as food, transportation, etc.
  • Checking or savings accounts
  • Investments in stocks, bonds, mutual funds, certificates of deposit, money market funds, and trust accounts
  • The amount vested in a retirement savings account
  • The cash value of a vested life insurance policy
  • Receipt of tax return refunds
  • Verified gift funds

NOTE: Certain assets may be “discounted” such as stock and bonds due to market conditions.

Unacceptable Sources of Reserves

  • Funds that have not been vested
  • Funds that cannot be withdrawn under circumstances other than the account owner’s retirement, employment termination, or death
  • Stock held in an unlisted corporation
  • Stock options and non-vested restricted stock
  • Personal unsecured loans
  • Interested party contributions (IPCs)
  • Cash proceeds from a cash-out refinance transaction
  • Cash on hand or stashed away at home.

NOTE: If you are refinancing and you qualify for a HARP loan, you may not need a cash reserve.

 
Please call me if you have any questions or concerns regarding "cash reserves."
     
 

2

Kenton Becker,
Sr. Loan Officer
Phone: 206-686-8822
Cell: 206-423-2552
Fax: 206-309-4736
MLO/NMLS #123961
Email Me

 
 
This information does not represent an offer or commitment to enter into a loan agreement. Equal Housing Opportunity Lender. Rates, Program, Fees, and Guidelines are subject to change without notice. Not a commitment to lend. The accuracy of all information, regardless of source, is not guaranteed and should be personally verified through personal inspection by and/or with the appropriate professionals. Source: MortgageCurrentcy.com. Land Home only conducts business in states we are approved to. Land Home Financial Services 22525 SE 64th Place, Suite 220, Issaquah, WA 98027. Washington Consumer Loan Branch Office License #CL-89331. NMLS ID # 89331. Date: 2-19-13

MLO-123961

(Click the Play Button to Hear a Special Message from Kenton) 
Mike and I are so happy with the results of our refinance. We really were able to accomplish all of our goals. I am amazed that we were able to get a lower interest rate, a lower monthly payment, and still get cash out to pay off other debt...which will save us even more money. You knew what you were doing and did everything possible to make this process easy and successful for us.

Thank you, thank you, thank you!

Again, I couldn't be more thrilled with how everything turned out.

All my best,

Lindsey (and Mike) Corley, Kirkland, WA

"I really enjoyed working with Kenton, he was very effcient and always followed up right away. It was a pleasure work with him. "

Benjamin Atwell
puyallup, Washington

Kenton Becker's service was outstanding all through the process. I have done 15 - 20 loans and My experience with Kenton was great. He always returned my calls or E-mails promptly and got me the information I requested.

Ken Morris, Everett, WA

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