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The Importance of Documenting Assets When Considering Financial Stability

The Importance of Documenting Assets When Considering Financial Stability


The Importance of Documenting Assets When Considering Financial Stability

Lenders look at a variety of factors when deciding if a potential borrower will be able to repay a mortgage loan, such as down payment, credit history, debt load, and income. Your assets are an important part of the equation as well. Acquiring assets shows financial stability and can have a big impact on your ability to get a mortgage, whether you’re going for a traditional loan, an FHA or VA loan, or a USDA home loan. Let’s look at some important information about assets.

What are some examples of assets?

Your assets are finite items of value you’ve accumulated. Assets add to your net worth and show that you’re a good credit risk. Examples of personal assets are cars, boats, houses, land and even valuable jewelry. It also covers your financial assets like your savings account, stocks, bonds, your retirement accounts, and your life insurance.

Why are they important to the lender?

Extending credit comes with an associated risk, and lenders take steps to minimize the risk of losing their investment. For borrowers who can show a number of assets, the risk is perceived as lower than borrowers who don’t have any assets. Lenders are more comfortable approving borrowers who can show documented assets, as they help offer a more positive financial picture for the mortgage applicant.

How do you document assets?

Proving you have assets means you need to bring documentation to your lender. Bring your bank statements, retirement account balances, and statements from your stock portfolio. If you received a gift (from your parents, for example) as a down payment, be prepared to show a gift letter proving the money was truly a gift and not a loan. You might also need to give your lender permission to verify your assets with your financial institutions.

What does “seasoned” assets mean?

Seasoned assets are a good thing for your chances of securing a mortgage. This term refers to your assets being in the same place for 90 days or longer. For example, if your saving account has had $20,000 in it for a year, all that money is considered a seasoned asset. On the other hand, if you’ve saved diligently from the last four paychecks and built up a savings account, that money is not seasoned. Lenders look at established accounts as part of a more credible, dependable financial picture and weigh seasoned assets more favorably than new ones in approving you for a mortgage loan.

Being able to show documentable assets is a critical part of your mortgage approval process. Gather the required documents to give the lender evidence that you can handle and manage the responsibility of a monthly mortgage payment. However, don’t be discouraged if you have few or no assets, as they are just one piece of information the lender looks at in determining your financial health.

Let MIG help pave the way to owning your dream home. Contact us today to discuss your homebuying goals.

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at migonline.com Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:

  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020