When it comes to RE ownerhip it is the time period you have the RE title in your name. Proofs are public records through title report and closing documents such as final closing statement. Most of the lenders would like to see that you own it for 6 months or more. They will be very suspicious If you just got it for a week and refinancing or selling it for say 30 % or more than you originally got it for. They are avoiding collusion or some gimmick for borrowers and or sellers to raise money with illegit transactions. My brain is not working well today. Can somebody explain this one better or is this good enough.
Seasoning of down payment and closing cost money for Fannie Mae or Freddie Mac Grade loans where in you get the best rate, term and lowest closing cost compared to other loans is 2 months. This means if you need $30,000 for down payment and closing cost to buy that cetain property, lenders want to see these monies documented to be in your savings and checking accounts for 2 months. Better if you have much more left after putting downpayment and closing cost. They don’t want this borrowed because it can jeopardise the loan if you have too much debt payments. Proofs are Bank accounts and or Verification of deposits.
Hope this help,
RDLA
What exactly is seasoning? - Posted by Denver Investor
Posted by Denver Investor on September 14, 2004 at 24:18:50:
I’m a new homebuilder in the Denver Metro Area and have decided to move into other forms of RE investing. I’ve read over many of your posts and it appears that several of you are knowledgeable on the subject of financing.
A theme that appears often is the idea of “seasoning.” Will one of you give me a good definition of seasoning. Also, if the the loan is secured by a property with equity, why would a lender hesitate to provide a non-seasoned loan.
Posted by GMann on September 14, 2004 at 10:54:52:
Ownership seasoning - How long a seller or owner has been on title. That simple.
Conventional loans don’t have ownership seasoning except for take out loans on construction to perm.
Flipping - Buying a property and re-selling within 12 mos. This greatly reduces the # of non-conventional lenders that will lend on the true appraised value of the property. The majority of non-conventional lenders will only lend on aquisition cost + documented cost of repairs + (0-15%), not appraised value or purchase price. The buyer would have to come up with cash for the remainder of the balance because the overwhelming majority will only allow 100% CLTV (Combined Loan to Value). Meaning…you can’t finance the balance if it’s over the lender imposed value.