While it might not literally be stashed under your mattress, “mattress money” is a moniker used to describe money saved outside of a trusted financial institution and without a documented paper trail.

When it comes to mattress money and mortgages, there are a few things you need to know.

mattress money and mortgages

You may have cash sitting around because of the recent sale of a car or items from an estate sale. You may have received a small inheritance or an outright gift from friend or loved one. And, you might assume cash is cash, but when it comes to a large real estate transaction the way you save money can be just as important as having access to it in the first place.

One of the most important things a mortgage lender will look at on a home loan application is how much ‘verifiable’ money is currently available. You will need to be able to prove you can cover the down payment, closing costs, and any cash reserves required. This verification is done by reviewing recent copies of financial statements.

If your savings account is short by $5,000 you can’t just deposit loose cash or ‘mattress money’ into the account to cover the shortfall. Lenders need to be able to verify the source of funds or funding you will be using for your home purchase is not “dirty money”. They are accountable to ensure this meets any audit and can prove the money is not being laundered or the result of any illegal activity.

If plan on using saved cash reserves toward the purchase of your future home you need to move this cash out of your home vault (or mattress) and into your bank account ahead of time. Let it sit in this bank account for a few months. This will let the funds “season,” and the lender should not question where the funds came from (with the appropriate amount of “seasoning”). While there’s no universal guideline, funds should generally be “sourced and seasoned” for no less than 60 days or two bank statement cycles. The longer the better. 

Mattress Money and Mortgages – Just another reason to start working with a trusted REALTOR® in advance of your goal of buying a home; sooner than later.

Just know The Millam Real Estate Group has your back! 763.241.7607