Richard's Real Estate Thoughts: Importance of Assets for your Home Purchase

Most clients recognize the importance of credit and income to qualifying for a mortgage. Assets though are as important, and for many clients it becomes the most important simply because it is the qualifying requirement that they missed.

All programs have specific guidelines stipulating what funds are required for closing and importantly what sources are allowed to supply those funds.

Conventional home loan programs typically require that home buyers must have their own funds to close.

Government home loan programs typically allow other sources for funds to close, such as a family gift.

Funds to close include the required down payment, closing costs, prepaid and tax/insurance escrow costs, and if required reserves funds that must be available after the purchase closes.

More and more, lenders are reviewing asset accounts very closely to check that all funds being used for closing (down payment, closing costs, prepaids/escrow costs, and reserves) are from acceptable source.

Once a deposit is made, that record is established. Any deposit from a source that is difficult to document or that is not allowed for the loan program, may mean that you cannot qualify for that program, or at least that you must delay your home purchase.

When you are preparing to purchase, take time, ahead of time, to  understand the funds that will be required, and what sources are acceptable.

In today's market, prospective buyers are well informed about the credit requirements for a home purchase and take action to meet those credit requirement.

It is equally important to ensure that you assets documentation will meet the loan requirements. Call and discuss what funds and asset documentation you will need before you begin to look for your new home.

And certainly know what funds will be needed before you begin to negotiate the contract for the new home you want to be yours.