MORTGAGE ASSETS DEFINED
By Jessica Hudson | November 1, 2019
The word assets refers to anything that is useful or holds value. You probably have plenty of assets - in fact, you'll be packing them up in boxes and moving them if your home purchase goes through. But a lender doesn't care about your spoon collection or the guitar your favorite uncle gave you when you were a kid. Your lender wants to know about the funds you have in various accounts.
The assets verification that mortgage companies do relates primarily to checking, savings, retirement and investment accounts you hold at the time you apply for a home loan. You'll need the approximate current balance in each account when you speak to your lender, but don't worry about being exact or the balance changing from day to day. Also important to list is any businesses you own or have interest in. While vehicles are higher dollar items, they are not considered liquid and will not be considered in your overall asset picture.
Listing your statements is only the beginning, though. You'll have to back up that list with documentation. Your lender will want to see documentation for the past two months for each asset you've named. This means the past two months of statements for all checking, savings, retirement and investment accounts you've listed on your application. If you only receive quarterly statements, the most recent quarterly statement will be required. If you have a higher current balance on an account than what is shown on the last statement that you want considered, a recent transaction history can be used. Additional items might also be needed for any business interest listed such as K1s, 1065s, and/or percentage of ownership documentation.
When you're providing an asset statement for a mortgage, the lender's primary concern is confirming that your closing costs and reserves are coming from a valid source. If you lender looks at your bank statement and sees an unusual deposit of a large amount of money, for instance, they are required to verify where those funds originated from. Acceptable sources would be gift funds (from an allowable party), something job related, a transfer from another account, etc. Cash is unable to be sourced and therefore the deposit would be subtracted from your available assets.