Finance
In mortgage lending, 'seasoning' of funds for a down payment typically requires:
ADown payment funds to come from a 401(k) plan only
BDown payment funds to have been in the borrower's account for a specified period (typically 60-90 days) to verify they are the borrower's own funds✓ Correct
CThe down payment to be received at least one year before closing
DNo seasoning is required for any down payment source
Explanation
Lenders typically require that down payment and reserve funds have been in the borrower's account for 60-90 days (seasoned) to verify the funds are the borrower's own and not a secret loan. Gift funds and other sources have different documentation requirements.
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Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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