Is extra cash problematic?

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  • #63547

    So I’ve been going back and reading old forum threads and I’m confused about something. Are extra cash deposits problematic?

    My income from my full time job gets direct deposited in my bank account, all my bills are paid electronically, etc. so there’s a paper trail for my paychecks, rent payments, etc.

    That being said, I sometimes have extra money because I breed my yorkies and I get cash from the puppy sales. It’s not money that I count on to pay my living expenses, etc. and its not money that I get on a regular basis (1-2 litters a year) – its basically extra money that I typically use to either purchase stuff my kids need, vacation, etc. I plan on putting whatever I make off of my next litter towards my MRF. Typically I’d deposit the cash in my bank account so it would show up as a cash deposit. Is that going to be an issue, should I not put the money in my bank account anymore?

    Same goes for other cash deposits, for example a few months ago we upgraded our phones so I sold the old phones on FB marketplace for cash… obviously there’s no paper trail for those kind on instances.

    #63548
    Nelsont
    Member

    Short answer: no.

    Any large cash transactions, both deposits and withdrawals (including cash app, venmo, etc.) need to be explained. A LOE is usually sufficient. As long as this is not a regular occurrence you shouldn’t have to worry. Worst case scenario would be you cannot use those deposits for your MRF. But, it sounds like you aren’t in that situation.

    #63550
    TTrumble
    Member

    Hello TattedQueen87,

    The extra deposits will not be a problem as long as you explain where the money came from. As Nelsont noted, a Letter of Explanation will probably be sufficient. You should be able to use it toward your MRF, but not for your Payment Shock if you have any.

    The explanations are necessary for a couple of reasons. one is that it is a key element in determining your reliable income and therefore yoru affordable mortgage payment.

    The other is something a lot of people aren’t familiar with. Most people who know of the Dodd-Frank Act, which was passed in 2008 in response to the mortgage crisis and economic crash, only think of it as a set of mortgage regulations. In fact, it did more than set rules for mortgage modifications and new mortgage applications. It also tightened up mortgage fraud and anti-money laundering laws. The net effect is that ALL deposits of a significant amount ($100-plus) must identify the source of the funds to ensure that they are legally obtained.

    A sideline dog breeding business such as you describe is not going to be an issue. Just highlight any deposits from it on your bank statements and write the LOE. You’ll be fine.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    • This reply was modified 2 years, 7 months ago by TTrumble.
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