Finance
In the context of mortgage underwriting, 'seasoned funds' refers to:
ADown payment funds that have been in the borrower's account for a specified period (typically 60-90 days), showing they were not recently borrowed✓ Correct
BFunds from retirement accounts that have aged beyond the penalty period
CInvestment funds held in a seasoned (matured) account
DFunds approved by the lender after a review process
Explanation
Lenders require that down payment funds be 'seasoned' — meaning they have been in the borrower's bank account for a specified period (typically 60-90 days). This demonstrates the funds are genuinely the borrower's own savings rather than recently borrowed money (which would increase the borrower's debt load).
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Key Terms to Know
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.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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