Verifying your debts, assets, and income for the loan process.

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

Use my Application Checklist to gather the documentation requested by most lenders.

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. It is imperative that you keep these assets and debts unchanged until after your loan closes. Do not pay down any credit cards. Also keep your cash reserve the same. The lender will verify that your assets and debts are unchanged a day or two prior to closing.

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.

Take extra care to document the sources for any monies to be used for the down payment or closing costs. Talk to your mortgage broker regarding gifts from friends and relatives. Most lenders require letters to verify these gifts.

Acceptable Down Payment & Closing Costs Sources

Cash in a bank account

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

Life insurance

Personal property estimate - cars, boats, antiques, jewelry, etc.

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.