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Documenting Your Assets – Verifying Your Down Payment
When buying a home, it
is not enough to just "come up" with the money. With the exception of
"no asset verification" loans, lenders want to verify where the money
comes from. This is partially a quality control feature to protect
against fraud, and partially an underwriting tool to determine your
qualifications as a borrower.
If you can document the
funds come from your personal savings, the lender is more confident of
your strength as a borrower. A savings history indicates a level of
stability.
In addition, if you can
verify you have additional assets that are not needed for the down
payment, it is important to document those, too. Additional assets are
"reserves" you can draw upon during times of trouble, such as
unemployment, medical emergencies, and similar occurrences. Additional
assets can also help to document that you have a history of saving
money, which makes you a more dependable borrower.
It is extremely
important to completely document the paper trail of any funds you use
for down payment and closing costs. The sections that follow offer
guidance on both verifying assets and documenting them as a source of
your down payment.
copyright 2000 by Terry Light and RealEstate ABC, modified 2002
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