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Verifying Your Down Payment, Closing
Costs, Assets, Income and Debts
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.
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.
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
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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, 401(K) and retirement accounts
Life insurance
Personal property estimate - cars, boats, antiques, jewelry, etc.
Other real estate or property
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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.).
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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.
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