Verifying Down Payment, Assets, Income, and Debts

A critical step in the mortgage loan application process is to verify the source 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 the source of your down payment and that you will have a savings reserve 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 money to be used for the down payment 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

Assets

Collect information about your personal assets. These types of assets increase your net worth, display an ability to save and help strengthen your credit worthiness.

Common Assets Considered in a Mortgage Loan Application

• Stocks, bonds, mutual funds, 401(K) and retirement accounts
• Life insurance cash value
• 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 + 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.