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Documenting
Your Assets – Verifying Your Down Payment
When buying a home, it is not enough to
just "come up" with the money. With the exception of
"no asset verification" loans, lenders want to verify where
the money comes from. This is partially a quality control feature to
protect against fraud, and partially an underwriting tool to determine
your qualifications as a borrower.
If you can document the funds come from your
personal savings, the lender is more confident of your strength as a
borrower. A savings history indicates a level of stability.
In addition, if you can verify you have
additional assets that are not needed for the down payment, it is
important to document those, too. Additional assets are
"reserves" you can draw upon during times of trouble, such
as unemployment, medical emergencies, and similar occurrences.
Additional assets can also help to document that you have a history of
saving money, which makes you a more dependable borrower.
It is extremely important to completely
document the paper trail of any funds you use for down payment and
closing costs. The sections that follow offer guidance on both verifying
assets and documenting them as a source of your down payment.
copyright 2006 by Terry
Light and RealEstate ABC
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