Verifying Your Down Payment,
Closing Costs, Assets, Income and Debts

A critical step in the mortgage loan application process is to verify the sources for your down payment, closing costs and assets, as well as documenting income and debts. The lender uses this step to determine your qualifications as a borrower.

Down Payment & Closing Costs

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.  The amount over and above what is needed is called "cash reserve".  Lenders like to see at least two times the totaly monthly payment on fully documented loans and as high as six times the total payment on some "Low Doc" loans.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.  Click here for a detailed list to document what the lender will need.

Acceptable Down Payment & Closing Costs Sources

• Seasoned cash in checking an savings bank accounts
• Mutual funds / stocks / IRA / 401K
• Proceeds from the sale of another property
• Gift from an immediate relative
  

Assets

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, 401K and retirement accounts

• Whole Life insurance with a cah balance

• Other real estate or property

Income and Employment

The lender 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.).

Debts

Your lender will want to review a list of all your current debts. This along with your credit report will provide the lender with a snapshot of your obligations.  The lender will want to confirm that you will not be overextended when the mortgage payment is added to your current debt load.

Click for more information about Income and Debt Ratios used to approve your loan.