Verifying Your Down Payment, Closing Costs, Assets, Income and Debts
A critical step in the mortgage loan application process is to verify the source(s) for your down payment, closing costs, as well as documenting income, debts, and assets. The lender uses this step to determine your qualifications as a borrower.
Income and Employment
The lender will need to confirm your current gross income and have evidence of stable employment. Documentation requirements vary depending upon a number of factors - including your source of income (hourly, salary, salary + bonuses, salary + commission, commission, self-employed, etc.)
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.
Down Payment & Closing Costs
Documenting the source of your down payment and confirming that you 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. Take extra care to document the sources for any monies to be used toward the down payment and / or closing costs.
Acceptable Down Payment & Closing Costs Sources:
- Cash in a bank account
- Mutual funds / stocks / IRA / 401(K)
- Proceeds from the sale of another property
- Gift from an immediate relative
Collect information about your personal assets that add to your net worth and help to establish your credit worthiness.
Common assets considered in a Mortgage Loan Application include:
- Stocks, bonds, mutual funds, 401(K) and retirement accounts
- Life insurance
- Personal property estimate - cars, boats, antiques, jewelry, etc.
- Other real estate or property