Analyzing Assets
Lenders process the borrower's assets to analyze the borrower's eligibility in two areas:
- Confirm that the applicant has sufficient assets to meet closing costs and program guidelines.
- Verify that such assets are acceptable.
The accumulation of assets demonstrates how well the borrower has used his or her income; while the record of liabilities shows how well the borrower has handled debt. A negative net worth generally means that the applicant is over-leveraged (over-borrowed) and could result in rejection.
Mortgage loan applicants do not have to disclose all assets, just enough to qualify. The applicant must show sufficiency in two areas:
- Liquid assets. The borrower must verify sufficient liquid (cash or easily cashed) assets for any down payment, closing costs, prepaid expenses and reserve requirements.
- Hard assets & Net worth. The borrower should demonstrate positive net worth. For most borrowers, hard assets must be counted to establish positive net worth.
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Real Estate 101
This book makes it easy to not only buy a home, but figure out everything that you need to do, even get a loan. In simple and easy to understand language, it talks about where you should buy a home, what to look for in a home, how to find a home, how to get an agent, how to get a mortgage and more. This is a step by step process that you, a new home buyer, can use to purchase a home.
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