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 also that you will continue to have some savings and/or assets after the transaction is complete  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. This means that you will need to provide copies of your bank statements to your lender; usually for two months. Lenders will want copies of every page of the statement. Make sure this is done carefully.

Items printed from the internet can be used, but they need to be complete. In other words, these documents need to show name, address, account number as well as the date and the bank's name and address and be on a company document.

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 documented and dated information about your personal asset accounts 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.). Generally, the lender will want at least one full months pay check stubs; W2's for the last two years, and in some cases Federal 1040's.

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.