How Mortgage Underwriters Consider Verified Assets For Home Loan

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How Mortgage Underwriters Consider Verified Assets For Home Loan

This BLOG On How Mortgage Underwriters Consider Verified Assets For Home Loan Was UPDATED On July 7th, 2018

Home buyers applying for a mortgage loan, lenders will need to see verified assets for home loan. Verified Assets For Home Loan are the following:

  • checking accounts
  • savings accounts
  • IRA
  • 401K
  • Keogh
  • investment accounts

All assets needs to be sourced and verified in order for it to count. Cash is non-existent in the mortgage world. Cash is considered not verified funds.

  • Lenders will require borrowers has verified assets for home loan for the down payment and closing costs of their purchase prior to a clear to close
  • All loan programs have strict guidelines when it comes to verified assets for home loan programs

Copies of Cashier’s Checks Or Canceled Checks On Earnest Money

Never pay earnest money with cash

  • This is because cash does not count in the mortgage industry
  • Pay it with a bank check or cashier’s check
  • Make a copy of the check and/or cashier’s check
  • This because that will be verified assets and need to provide that to mortgage lender
  • Also, 60 days of bank statements will be required by mortgage lender
  • Funds of the earnest money leaving bank account will need to be verified
  • Earnest money will be counted towards down payment on home purchase as long as it is verified

Checking And Savings Accounts Are Verified Assets For Home Loan

Two months of bank statements will be required by lender

  • Every larger or irregular deposits will be reviewed
  • Sourcing will be required to be counted as verified assets
  • All pages of the bank statements and/or bank print outs will be required even if it is a blank page
  • Reason for this is because bank statements have page of 1 of 7, page 2 of 7, page 3 of 7, page 4 of 7, page 5 of 7, page 6 of 7, page 7 of 7
  • If one of those pages are blank, lenders will need to account of all pages

Irregular And Large Deposits

All large and irregular deposits needs to be sourced in order to be counted.

  • For example, wage earners with regular paycheck deposits direct deposited to checking account, a mortgage underwriter will see that
  • It will state that the paycheck deposit is from employer
  • That is considered sourced deposits
  • However, if bank account holder gets a $5,000 deposit that is irregular, underwriters will question where that came from
  • If it has no paper trail and it is a cash deposit from a gift from a relative, then it cannot be counted as verified assets for home loan
  • If the $5,000 deposit can be documented, it can be used
  • Acceptable documentation to use the $5,000 deposit as verified funds can be the following papertrail:
    • sale of a car
    • need to show the copy of the check
    • copy of bill of sale
    • copy of title
    • deposit slip
  • If borrowers can provide the above documentation from the sale of the vehicle, it is considered verified assets for home loan
  • The $5,000 can be used as sourced funds and can be counted for down payment and/or closing costs on home purchase

Retirement Accounts Are Verified Assets For Home Loan

IRA, 401k, and Keogh Accounts are all verified assets for home loan purposes.

  • 60% of the account value on IRA, Keogh, and 401k accounts can be used as verified assets for home loan
  • The other 40% can be used for reserves if underwriter requires reserves
  • Reserves cannot be gifted and needs to be actual funds of borrowers
  • 3 to 4 unit properties require 3 months reserves of principal, interest, taxes, and insurance, also referred to as PITI
  • Copies of the retirement plan is required, especially the withdrawal agreements

If borrowing from IRA, 401k, or Keogh Accounts, the monthly payments to repay those accounts will not be counted towards the calculation of debt to income ratios . This is since it is viewed as borrowing against yourself.

Gift Funds Can Be Used As Verified Assets for Home Loan

Gift funds from a relative can be used as verified assets for home loan for down payment and closing costs purposes only.  Gift Funds cannot be used for reserves or to pay off existing consumer debts.

Real Estate Agent As Home Buyers

If you are a real estate agent and are purchasing a home, you can use your real estate commissions towards your down payment as verified assets for home loan.

Related> Cash to Close

Related> Unsourced fund in mortgage approval process

Related> Funds in bank statements

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