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In order to get preapproved for a mortgage, your mortgage lender will need to verify your income and asset information to determine how much home you can afford and the interest rate you’ll pay on the loan.

While it might seem a bit taxing to provide all this documentation, it benefits you in the end, as you won’t end up with a monthly mortgage payment that you can’t afford.

But before we get too deep in the weeds, let’s discuss what asset statements are and what a verification of your income and assets entails.

What Is An Asset Statement?

Asset statements are documentation of your net worth and assets. When you apply for a mortgage, you will need to verify that you own certain types of assets and your sources of personal wealth. You’ll submit a collection of statements detailing your asset portfolio to your lender in order to do so.

It’s important for a mortgage lender to be able to review your asset statements so they can know for certain that you won’t be burdened with a mortgage you can’t afford. Asset statements are meant to provide a comprehensive look at your finances, so not only will your prospective lender feel more confident that you’ll be able to afford your mortgage payments, but they’ll also make sure the mortgage you’re approved for is the right one for your financial goals.

What Types Of Assets Should Be Reported On Your Mortgage Application?

Let’s discuss some of the types of verifications that will need to be made via asset statements as you enter the mortgage application process.

Liquid Assets

Mortgage lenders will want to verify that you have the means to pay the principal, interest, taxes and insurance on your mortgage. This capability is determined by items you own that have value, like savings accounts, checking accounts, stocks, etc. When these assets have a cash value, or are easily converted into cash, they’re known as “liquid assets.”

Lenders want to confirm that enough of your assets are liquid in case of a financial emergency that leaves you unable to keep up with your mortgage payments. When life throws you curveballs that reduce your income (loss of a job, medical emergency, etc.), your liquid assets are there to help you pay your bills.

Cash in your savings and checking accounts needs to be “seasoned.” This means that it has been in your checking or savings account for a considerable time (at least 2 months).

Most experts suggest having 6 months of your current income in cash/liquid assets to cover an unforeseen financial issue. This ensures that you have a way to continue your mortgage payments should something happen to your main source of income.

Non-Liquid Assets

In addition to documenting your liquid assets, you can also submit proof of non-liquid assets, or assets that are harder to convert to cash like cars, self-owned businesses and any other item of material value like artwork or jewelry. Some physical non-liquid assets are referred to as “fixed assets,” meaning they can take longer to convert into cash and may experience a change in value from the time they were originally purchased, like antique furniture and some types of real estate property.

While these assets may be harder to liquidate in an emergency, it can still be valuable to lenders to be aware of your asset portfolio as a whole.

Gift Funds

If you receive money as a gift from a loved one to be put toward closing costs or your down payment, it counts as an asset in the eyes of a mortgage lender, and it’s important to verify its source during the application process. To use your money safely without putting your mortgage approval at risk, provide a bank statement showing a deposit of the funds into your account as well as a bank statement from the gift giver showing that the funds had previously been housed in a legitimate account.

What Is A Verification Of Income And How Does It Relate To Asset Verification?

While your income technically isn’t an asset, it still plays an important role in the financial reporting component of your mortgage application. When a mortgage lender requests a verification of your income, they’re checking to see if you have the means to make your mortgage payments each month. You wouldn’t borrow more than you have the means to pay back, and your monthly mortgage payments are no exception. That’s why your mortgage lender will request this information – it’s a way of making sure you’re able to finance your mortgage payments.

In order to confirm your income, a mortgage lender will request a few documents. A good way to remember the documentation you’ll need is to remember the 2-2-2 rule:

  • 2 years of W-2s
  • 2 years of tax returns (federal and state)
  • Your two most recent pay stubs

Additionally, you should have records at the ready of your most recent checking account statements, current savings account statements, monthly debt obligations and statements from any other loans you may have (personal, student, auto, etc.) and your most recent credit card statements.

How To Get Asset Statements

In many instances, the documents you’ll need to verify your assets and income – checking and savings account statements, retirement account statements, brokerage statements and W2s, for example – can be easily requested from your bank, your broker or your employer.

However, for any non-liquid assets you own, you’ll likely need to provide documentation from when you first purchased it or certificates of ownership in order to have them be considered a legitimate part of your asset portfolio. For any gift funds you decide to use toward buying a home, you’ll need a gift letter verifying its origins and making it clear that the money isn’t a loan that the prospective borrower will eventually have to pay back.

Tips For Success When Preparing Asset Statements

As you compile your asset statements to prepare for your mortgage lender’s review, there are some missteps you ought to avoid to maximize your chances of getting approved. Here are a few tips for prospective borrowers before you begin the process of verifying your assets.

Be Careful To Avoid Overdrafts In The Months Leading Up To Applying

Since you’ll be providing your lender with a look into your checking and savings accounts, it’s crucial that your bank statements don’t reflect a pattern of your bank having to charge overdraft fees. If you’ve had multiple occasions when your account has become overdrawn, that’s likely to be interpreted by a potential lender as a red flag, and it could jeopardize your chances of getting approved.

Be Careful With Making Cash Deposits Before And During Verification

As mentioned above, cash needs to have been deposited in your account a while before your mortgage application process begins in order to demonstrate your ability to save money. However, those cash deposits also need to be verifiable for them to be taken into consideration by the lender as part of your assets.

While you’re preparing to apply for a mortgage, it might be wise to shift away from some of your cash-centered money habits and place greater focus on contributing to the assets that can be accounted for as part of your mortgage application. Only withdraw cash as needed, deposit checks directly into your bank account rather than cashing them and make it a priority to present yourself as the most financially stable and responsible applicant possible.

Be Careful Moving Money Around During Verification

If your lender has already started reviewing all of your asset statements, avoid making any major fund shifts between your bank accounts until the review is complete. In many cases, transferring money around in the middle of the verification process can result in the underwriter having to start the process over, which can delay your approval for a mortgage.

The Bottom Line

Verifying your assets is a vital part of getting approved for a mortgage. As you prepare to start your home buying journey, make sure your finances are in order and create a list of every asset statement you’ll need to compile ahead of time. The more organized you are with your documentation and the more responsible you are with your asset portfolio, the smoother your interactions with your prospective mortgage lender will be.

Confused about other aspects of the mortgage application process? Here are 20 mortgage questions to ask your lender!

This Post Has 14 Comments

  1. I was preapproved for a fha loan, I had 14 months of employment from 5/2018-6/2019 had a gap of employment from 6/2019 to 6/2020 when I was hired at my new employer still working have 9 months in as of now, is this enough employment for the underwriter? Or will this be a problem? I’m pretty close to closing on the property but keep getting asked questions about employment verification and such! Before 2018 I received ssdi would that count as additional verification for income/employment I no longer receive it because I am now working a full time job. My lapse of employment for the year was due to 2 semesters of college and covid.

    1. Hi Jay:

      I’ll start by saying that I can only speak to our policies, and not those of other lenders. However, based on the information you’ve given me here, I recommend you speak with one of our Home Loan Experts at (888) 980-6716. What I can tell you for sure is that while SSDI would have counted as income while you were on it, it doesn’t count as work history because it’s not a job. Thanks for reaching out!

    1. Hi Ray:

      I’m not 100% sure what type of loan you’re referring to. This page features many of the types of mortgages we offer. I recommend speaking with one of our Home Loan Experts at (888) 980-6716 to go over your options. Thanks!

  2. Spouse has a job transfer out of state (same company) and we’re looking to purchase a new home worth about the same as current home, but I do not yet have a new job lined up out of state. Income will be cut in half but we will be making significant money from the net proceeds from the sale of our existing home. Can this be used as proof of income along with any reserves we have? Or can my current proof of income be used since I’m still employed even though it will stop upon moving?

    1. Hi Heidi:

      The income from the sale can be used as reserves because those are assets. However, it can’t be used as income because income implies it keeps coming in. Also, you can’t use the proceeds from your current job’s income because we have to be able to show that the income is likely to continue. Therefore, only your spouse’s income could be used. I recommend you speak with one of our Home Loan Experts at (888) 980-6716.

    1. Hi Robert:

      I’m going to get this over to our team to make sure we can get you taken care of from an approval letter standpoint. However, I can tell you that it’s a PDF, so using Adobe reader or some similar PDF program may be the best way to access and print it. Have a great day!

  3. I am a SSDI beneficiary whose benefits are managed by a payee. Can I claim that as a source of income even though their name is listed as payee on my statements? If so, how would I go about validating this source of benefits?

    1. Hi Dede:

      You have your award letter and tax records and we would work with you to verify that your SSDI is going directly to your representative payee. I recommend speaking with one of our Home Loan Experts to go over your situation at (888) 980-6716.

  4. If I have already been preapproved and recieved my preapproval letter, will I need any further documentation prior to purchasing a home? IE: bank statements, paystubs, etc. I have already provided all my information and was approved based on that, but want to make sure I have everything prepared to finish this process smoothly.

    1. Hi Joey:

      There are cases in which mortgage lenders end up asking for that stuff again. My best advice in order to make sure everything goes smoothly is to save or have easy access to things like bank statements and pay stubs until your mortgage closes. Thanks for reaching out!

    1. Hi Sarah:

      That varies depending on the cost of the house the types of loan options you qualify for. Depending on the program, you can get into a primary home with anywhere between 3%–5% down. The mortgage lender will also require you to have at least a couple of months’ worth of reserves. This means that if you lost your job or for any other reason had a disruption in your income, you would be able to make your full mortgage payment including principal, interest taxes, insurance and homeowners association dues (if applicable) for at least a couple of months. If you want, you can check out our first-time home buyers guide. If you think you’re ready to purchase, you can get started online through Rocket Mortgage or give one of our Home Loan Experts a call at (888) 980-6716. Hope this helps!

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