Proving Assets to Purchase a Home
Verifying Your Down Payment and Cash to Close
Showing a paper trail of your cash to close is one of the most important things I do as a mortgage consultant. Large deposits must be explained and bank statements need to be shown.
Down Payment & Closing Costs
Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.
Take extra care to document the sources for any monies to be used for the down payment or closing costs. Usually we will need to show two months bank statements, all pages and explain any large deposits.
Acceptable Down Payment & Closing Costs Sources
- Cash in a bank account
- Mutual funds / stocks / IRA / 401(K)
- Proceeds from the sale of another property
- Gift from an immediate relative
- Mattress Money is not
- Cash on Hand is not
Before I submit your file here at Equity Loans LLC , I submit your file to an on-line underwriting engine in the sky so to speak. This engine will tap into the parameters required by Fannie Mae or Freddie Mac or FHA or whatever loan program I am submitting too. The engine will weigh all of the variables of your file. It will weigh your income, assets, liabilities and credit and issue a feedback. The feedback will tell me, up front, "yes, no or maybe." In actual terms it will say "approve/elligible" for Fannie Mae or "Accept" for Freddie Mac. It will say "Refer with Caution" if you are a maybe, or "Refer" if you are a decline.
The feedback will dictate exactly what I will need to process your file and get it closed and funded. If I have entered your information correctly and calculated your income correctly, all that remains is that your file needs to validated by someone over at the end lender or servicer.
Collect information about your personal assets that add to your net worth and help to prove your credit worthiness.
Common Assets Considered in a Mortgage Loan Application
Stocks, bonds, mutual funds, 401(K) and retirement accounts
Personal property estimate - cars, boats, antiques, jewelry, etc.
Other real estate or property
Assets need to be seasoned for one to two months prior to application
Typically what is needed is one or two months bank statements. (All pages) If there are any large deposits on the statements, they will need to be explained. It is my job to trouble shoot all of the items of your file so that when your file reaches the underwriter, there are no surprises.
All of these details are fully discussed before a single piece of paper is signed or you go shopping with your realtor.