Which assets can I include on my home loan application?
Are you getting ready to apply for a mortgage, but aren’t sure about your assets? The team at Proper Rate can help you work through what you need to include on your application, and make sure that all the i's are dotted and t's are crossed.
There are several types of items you can include in your mortgage application as an asset. These items can include money, investments, properties, cars, valuable items, business shares, and other financial assets. These assets demonstrate your financial stability and ability to repay the loan. When you're reporting assets, it's best to provide accurate values and supporting documentation. You can continue reading to get specific advice or apply for a mortgage pre-approval. A mortgage pre-approval is a common first step that homebuyers take to begin their journey to a new home.
Why does reporting assets matter to a mortgage lender?
It is important to inform your mortgage lender about your assets. This helps them understand your financial stability and assess your ability to handle mortgage payments. When you apply for a mortgage, the lender wants to ensure that you are a reliable borrower. They want to make sure that you will make timely payments and can handle the financial responsibilities of owning a home. Here's why reporting assets is important:
What types of assets should I include on a mortgage application?
When filling out a mortgage application, it's important to include a comprehensive list of your assets. Lenders use this information to assess your financial health and determine your eligibility for a mortgage. Here are the types of assets that you should include on your mortgage application:
Cash and Savings Accounts
This includes money you have in checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs).
Investment and Retirement Accounts
List all your investment accounts, like brokerage accounts, IRAs, 401(k)s, stocks, bonds, mutual funds, and other securities.
List any other properties you own, whether they're investment properties or vacation homes. Include the estimated value of these properties.
Even though vehicles are not typically highly liquid assets, you can still include them on your application.
If you own valuable items like art, antiques, jewelry, or collectibles, you can include their estimated value.
If you are a business owner or self-employed, you may need to include business assets in your financial records. These assets can include the value of your business as well as any equipment you own.
This category can include other important assets like trusts, royalties, patents, or valuable possessions not mentioned before.
When reporting these assets on your mortgage application, it's important to provide accurate and up-to-date information. Keep in mind that reporting your assets is just one part of the mortgage application process. Lenders will also assess your income, credit history, employment stability, and other financial factors.
How can I demonstrate proof of assets?
When applying for a mortgage, lenders typically require you to provide proof of your assets. This involves submitting documents that verify the assets you have listed on your application. Here's how you can demonstrate proof of assets to a mortgage lender:
Provide recent bank statements for your checking, savings, and other deposit accounts. Statements should cover at least the last two to three months. Make sure the statements clearly show your name, account number, and the account's balance.
Investment Account Statements
If you have investment accounts, show statements with balances and holdings for brokerage accounts, stocks, bonds, or mutual funds.
Retirement Account Statements
For retirement accounts such as IRAs, 401(k)s, and 403(b)s, provide statements that detail the account balances. These statements may also include information about vested employer contributions.
Real Estate Documents
If you own other properties, provide documents that demonstrate the value of each property. These documents can include recent appraisals, tax assessments, or sales contracts.
Counting vehicles as assets allows you to demonstrate their value through documents such as Kelley Blue Book or NADA valuations. These documents serve as proof of their worth.
Business Ownership Documents
If you have a business or own part of a business, show proof of your ownership and the business's value.
Other Relevant Documentation
If you're including valuables, antiques, collectibles, or any other non-traditional assets, provide appraisals or valuations from qualified professionals. It's important to provide complete and accurate documentation. Lenders may request recent documents to accurately represent your financial situation.
When you submit documentation, ensure that you properly redact your personal information, account numbers, and any sensitive information for security purposes. Remember that the specific documentation requirements can vary based on the lender and the type of mortgage you're applying for. Always consult with your lender to ensure you provide the necessary documentation in the format they require.
How can I calculate the value of my assets?
To determine your asset value for a mortgage application, collect documents such as bank statements, investment account statements, and property appraisals.
- Create a comprehensive list of your assets, including cash, savings, investments, real estate, vehicles, and valuables.
- Determine accurate current values for each asset using sources like recent statements, online valuation tools, appraisals, or expert opinions.
- Organize supporting documentation and provide precise values on the mortgage application.
Be prepared for verification by the lender, who may request additional proof or contact your financial institutions directly. If uncertain, consult professionals such as financial advisors or appraisers for accurate assessments. Accurate and transparent reporting is essential to help lenders make informed lending decisions.
What's the asset level I need to be at to get a mortgage?
The money required for a mortgage depends on various factors. These factors include the type of mortgage, the lender's requirements, credit score, debt-to-income ratio, and the loan program. While there's no fixed dollar amount, lenders typically require a down payment.
To qualify, you need to have extra money saved. You also need to have a low debt compared to your income. Additionally, a high credit score is required. Lastly, you need to have a steady job.
Assets bolster your application, showcasing financial stability and commitment. Consulting with mortgage professionals can provide personalized guidance on the appropriate asset level for your situation.
How can I start a mortgage application today?
Do you already have an idea of your available assets? Once you have a clear understanding of your assets, the next logical step is to obtain pre-approval for a mortgage.
Surprisingly, this process is simpler than you may anticipate. When you receive pre-approval for a mortgage, it gives you an idea of the likely approval amount. It also shows real estate agents and home sellers that you're serious about looking for a home. Apply online with Proper Rate to start your journey towards a new home.