Assets, or in the our case liquid assets are monies used for purchase down payments, closing costs, principal reduction, prepaids as well as gift funds. A common problem in the loan process happens when a buyer/borrower transfers money from one account to another. While this seems innocuous this single act can result in an underwriter adding multiple conditions on the loan. Often these conditions can include: new bank statements, copies of checks deposited into accounts, proof of ownership of said accounts, letters of explanation and the list literally can go on and on. All because an underwriter needs to verify source and seasoning of all funds into the transaction for the borrower. Why you ask? Here are a couple of scenarios.
Buyer gets money from Realtor to buy a home with a grossly inflated price. Buyer borrows down payment in the form of a personal loan resulting in a secretly higher debt to income ratio - which creates greater risk the lender. You get the point. It goes to the strength of the transaction. Money that is properly sourced seasoned results in lower risk. So remember when you are preparing to purchase a house - DON'T MOVE YOUR ASSETS!