Documenting Your Assets - Verifying Your Down Payment

When buying a home, it's crucial to provide documentation for the source of your down payment and closing costs. Lenders require verification of funds to ensure your financial stability as a borrower. Here's a breakdown of how to document various sources of funds:

Checking, Savings, & Money Market Accounts:

• Provide copies of your most recent bank statements covering two to three months.
• Ensure funds have been in the account for the entire period (seasoned funds) to avoid questions about large or unusual deposits.

Stocks, Bonds, Mutual Funds:

• Supply statements from your brokerage for the most recent 60-90 days.
• If you have stock certificates, make copies and provide tax records to show ownership duration.

Gifts:

• Obtain a gift letter signed by the donor, stating the relationship, property address, amount, and nature of the gift (non-repayable).
• Donor may need to provide evidence of funds availability, and keep copies of the check and deposit receipt.

401K or Retirement Accounts:

• Provide copies of the most recent statement to show assets and savings history.
• Keep all paperwork if withdrawing or borrowing against the account.

Employer Assistance:

• Make copies of all paperwork, including checks and deposit receipts, for funds provided as down payment assistance.

Savings Bonds:

• Photocopy the bonds and provide documentation if cashing them for down payment.
• Keep copies of paperwork from the bank for bond redemption.

Personal Property (Cars, Antiques, etc.):

• Estimate the value of personal property on the mortgage application.
• Larger loans may require more detailed documentation of personal property to match income.

Selling Personal Property:

• For selling a car, photocopy the registration, Blue Book page showing value, bill of sale, and deposit receipt.
• For other assets, provide ownership records, inventory, appraisals, and documentation of sale.

General Tips:

• Avoid cash transactions as they are difficult to verify.
• Document all transactions related to funds used for down payment and closing costs.
• Maintain copies of all paperwork, including checks, receipts, and bank statements.

By meticulously documenting the source of your funds, you can streamline the mortgage application process and demonstrate your financial responsibility to lenders.