At what point in the process of applying for a mortgage should I sell a mutual fund that I will use for the down payment on a house?

I am hoping to buy a house for $250,000, and I planning on funding $20,000 of the $50,000 expected down payment through the sale of a taxable mutual fund. I will pay the rest of the down payment with cash from a savings account. I've read that if there's a recent, large increase in your bank account, it can raise a red flag when you're applying for a mortgage. However, if I wait to sell the mutual fund until after I apply for a mortgage, will the lower cash balance in my savings account result in my being approved for either a lower mortgage or a higher interest rate? At what point in the process should I sell my mutual fund?

Financial Planning, Mutual Funds, Real Estate
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February 2018

You bring up a couple great points in your question.  When to sell your mutual fund?

I would sell when you know you are going to be buying place.  Once you've found the property and are about to enter escrow or already in escrow.  The risk / reward of holding the mutual funds longer just isn't there.

For the large cash into a bank accout issue.  You will likely just need to be able to show where the "NEW" money in your bank account came from.  Since it is coming from you own investment, won't really be an issue - just a little extra paperwork.   On the other hand if this was money from parents or friend or whatever - you would want to have large chunks of money 2-6 month ahead of applying for a loan. 

 

Best of Luck.

February 2018
February 2018
February 2018
February 2018