What You Need to Know About Proving Assets For a Mortgage
Recently, I have worked with numerous buyers who either objected to the scrutiny of their personal financials or were simply not prepared for the documentation requirements when obtaining a mortgage. Unfortunately, because most banks are heavily burdened with numerous short sales and foreclosures, they are reacting with strong guidelines and buyer requirements in order to prevent future replication of today’s situation.
In the hope of making the process easier for my buyers, I asked my mortgage banker, Justin Miller at Fembi Mortgage (754-214-7449), to explain what a buyer in today’s market should expect as requirements in order to obtain a mortgage.
Justin had this to say:
I cannot stress the importance of getting pre-qualified for a mortgage in advance. If I were to give you an exact time frame, I would say at least two months prior to entering into a contract. The biggest reason I say this is due to what is involved in proving the assets needed for closing costs, prepaid items, and down payment.
In most instances we will want your two most recent mortgage statements. However, on a conventional loan, Fannie Mae & Freddie Mac really only need the most recent. We will ALWAYS need all pages of your statements, even if they are blank. For example, if it shows pages 1 of 6, we will need all 6 pages, even if page 6 is blank. There are no ifs, ands, or buts about it. This is not difficult.
We don’t necessarily care about what is going out as much as we do the monies coming in. The only time we care about what is going out is if we see a debit of a loan or some type of debt that isn’t included on your credit report.
You will need to prove where all monies come from for your deposits if we are not able to make that determination. For instance, we can obviously see a direct deposit from your employer or a transfer from one account to the next. If we cannot make a determination, we will need a letter of explanation, accompanied by concrete proof. My suggestion is to NOT make any cash deposits or take any monies from someone personally unless it is going to be a gift from a relative. Also, I highly recommend to NOT make any transfers between accounts until after closing. It just simplifies the documentation process for everyone.
Getting a mortgage in today’s environment is not difficult IF you are dealing with a mortgage professional who is going to give you all of the correct information and IF you plan in advance. Make sure to set aside your most recent pay stub, two years of tax returns, both business and personal, if applicable, and your two most recent statements of assets.