Sunday, January 9, 2011

Mortgage Asset Documentation

Here are the basics (and more) about asset documentation requirements for a mortgage.

Lenders care about a borrower's assets for two reasons:
  • Do you have enough money for closing - to cover the down payment and closing costs?
  • Do you have enough money for any required reserves?

Lenders only care about liquid assets (cash or assets that can quickly be turned into cash).

If you are using a checking, savings, or money market account to prove you have enough money for a loan, you will need the most recent 2 months of bank statements.

If you are using a retirement account or a stock account, you will need the most recent statement.

Here's what the lenders look for:

  • Is the money really yours? Can you explain large deposits into your account?
  • Do you manage money responsibly? Do you have insufficient funds charges?
  • Do you have any liabilities that are not on your credit report? Car loans, child support payments, etc.?

You do NOT need to document all of your assets - only those assets that will be used to qualify for the mortgage. If you only need $5,000 to cover the down payment, closing costs, and reserves, then that's all you need to prove.

Why do some lenders ask for more documentation? More than likely, they don't know what they're doing. They probably did not use the underwriting software that Fannie Mae provides to lenders that tells them EXACTLY what is needed.

Want to watch our video of this tip? Check it out on our web site by clicking here.

Want to make sure your loan closes? Call the Mortgage Experts at 303-345-3683.

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