Avoid Preapproval Delays: What You Need to Know About Bank Statements and “Seasoned” Funds

Did you know that most banks review your last two months of bank statements during the preapproval process for a home loan? While it may seem straightforward, certain financial situations—like using cash saved at home—can add unexpected delays.

A Real-Life Example

We once worked with a client who planned to use cash they’d saved at home for their down payment. While it seemed like a simple plan, it delayed their loan process. The lender required them to deposit the cash and wait a few months for it to “season” before proceeding. Why? Because lenders must verify where your money comes from, and undocumented cash deposits often create extra steps.

What Is “Seasoned” Money?

Seasoned funds are money that has been in your account long enough (typically 60+ days) to appear on older bank statements. Lenders view seasoned funds as more reliable because their source doesn’t require further documentation.

How to Avoid Delays in the Preapproval Process

To streamline your preapproval journey, follow these tips:

1. Cash Deposits

   • Deposit any cash at least two statement cycles before applying for a loan.
   • Keep clear records explaining the source of the cash.
   • If no documentation is available, your funds may need to season in your account before they’re considered usable. Your lender can guide you on how long this might take.

2. International Funds

   • Transfer any money from international accounts early in the process.
   • Save supporting documents like bank statements or gift letters to verify the source.
   • Without proper documentation, seasoning may be required.

3. Large Transfers

   • Be prepared to explain and document any significant deposits or transfers.
   • If documentation isn’t available, seasoning may again be necessary.

Why It Matters

Lenders verify your funds to ensure they are legitimate and sufficient for your down payment and closing costs. By anticipating these requirements and organizing your finances early, you can avoid unnecessary delays and move forward with confidence.

Thinking Ahead Saves Time

If you’re preparing to buy a home, planning ahead can make all the difference. By understanding how lenders assess your finances and taking steps to document your funds, you can streamline the preapproval process and focus on finding your dream home.

We’re Here to Help

Navigating the home-buying process can feel overwhelming, but you don’t have to do it alone. Whether you’re just starting or ready to make an offer, we’re here to guide you every step of the way. Let’s make your journey to homeownership smooth and stress-free!