Assets Blog. Options MortgageWhen we Talk about Assets in the mortgage lending process, we are generally speaking about Liquid assets and funds for closing:

  1. Types of assets we can use:
    1. Checking / Savings
    2. Stocks, Bonds, Mutual Funds
    3. Retirement Accounts
    4. Gift Funds(From Qualified Donor)
    5. Gift of Equity(when a owner gifts their equity to the buyer for down payment)
    6. Borrower Funds(Secured by and asset of the borrower’s)
    7. Earnest Money Deposit(must have proof that earnest money cleared the account – Copy of check when written, Copy of cleared check, copy of online printout showing the earnest money cleared account)
  2. Ineligible Funds
    1. Foreign Assets
    2. Cash on Hand
    3. Unsecured Borrowed Funds
    4. Sweat Equity
    5. Undocumented Funds
    6. Illegally obtained Funds(my favorite)
  3. Two Things that Frustrate us the most about Assets
    1. Large Deposits – a single deposit that exceeds 50% of the total monthly qualifying income for the loan.
      1. Must be sourced – meaning we must have a paper trail to determine where the deposit came from. Examples:
        1. Selling an asset (car, boat, motorcycle)
        2. Gift from someone
        3. Repayment of a loan to borrower
        4. Transfer from another account
        5. Partial deposit of a paycheck
    2. All pages of Statements –  If the statements has page 1 of 8, we need all 8 pages even if some of the pages have a back that shows how to balance the account.

Because Assets are the proof of Funds to Close, and Down Payment is such a big part of the Risk Assessment of a loan, Asset statements are highly scrutinized.  The documentation for variances in statements causes the most frustration of any of the documentation that we require from the borrower.  Understanding this helps reduce the frustration of the mortgage process.