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Document Savings

Posted by  on Apr 16, 2009
 
If you are buying a home in Arizona, Georgia, Hawaii, Delaware, or any other state in the United States, it is important that people understand that it is not enough to just to 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 document funds from your personal savings, you have a better chance of finding a good lender and making the most of your money. The more you have documented, the more the lender is confident of your strength. 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 important to record the paper trail of all the funds you use for down payment and closing costs. The other sections offer guidance on both verifying assets and documenting them as a source of your down payment. Your lender may require you to document your income. This document could be in the form of pay stubs or tax returns going back two years.

If you are self employed your bank statements going back two years might be better than providing tax records; your mortgage lenders could discount a portion of your self-employment income. Another thing to keep in mind is that if you receive any other income such as veteran’s compensation, child support, or Social Security payments provide documentation for this income.

In order to keep up on this documentation of your assets, you should keep statements on file for any bank, investment, and retirement accounts you have. Another helpful tip is that before applying for the mortgage request copies of your credit reports from the three credit agencies and make sure the reports are accurate. If you find errors you will need to dispute the errors prior to submitting your mortgage application.

Another thing to think about when you are choosing a mortgage lender and a loan, is that you will need to submit the application and required documentation. Applying for a mortgage is not a difficult process; however, there are potential hiccups that could delay your closing on the loan. If you are unable to close before the time frame your lender is guaranteeing your interest rate expires, you could miss out on the rate you selected.

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