Verifying Your Down Payment,
Closing Costs, Assets, Income and Debts
A critical step in the mortgage loan application process is to verify the money sources for your down payment, closing costs and assets, as well as documenting income and debts. The underwriter uses this step to determine your qualifications as a borrower.
Down Payment & Closing Costs
Documenting the down payment comes from your savings and the fact that you will have the ability to save, and savings and/or assets over and above the down payment gives the underwriter 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. Large amounts deposited into your account will have to be tracked and verified. If you cannot document them, the underwriter will not count that money for down payment and closing costs.
Acceptable Down Payment & Closing Costs Sources
- Cash in all checking and saving bank accounts
- Mutual funds / stocks / IRA / 401(K)
- Proceeds from the sale of another property or other assets
- Gift from an immediate relative
- Down payment assistance programs
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
Life insurance (cash value)
Personal property estimate - cars, boats, antiques, jewelry, etc.
Other real estate or property
Income and Employment
The underwriter will want to confirm your current gross income and have evidence of stable employment. Documentation requirements vary depending upon a number of factors - including the source of income (hourly, salary, salary + bonuses, salary + commission, commission, self-employed, etc.).
The underwriter will want to review a list of all your current debts. This along with your credit report will provide him/her with a snapshot of your obligations. They will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.
So, for further information please contact me so I can explain all your questions. Sherry@SherryBitner.com or call or text me at 941-504-1445. Thank you!