Sale of assets

Proceeds from the sale of the borrower's personal or real property are acceptable liquid assets, as in the case of current homeowners who are selling their current properties and purchasing a new home.

The main challenge is to document the source of funds to be used for closing. For example, it is acceptable for the applicant to sell a car or jewelry to gather cash for the closing. However, the applicant must provide documentation of the sale and the borrower's receipt of funds.

If real estate is being sold to generate cash, the seller will normally receive a certified HUD-1 settlement statement from the closing agent. This statement is the typical documentation requirement.

The sale of other possessions—such as jewelry, electronic equipment, luxury items and cars—require more documentation:

  • Bill of sale. A signed bill of sale identifies the details of the sale.
  • Copy of payment check. The loan applicant selling the item should only accept a check payment, preferably a money order or cashier's check. The applicant should then make a copy of the check before depositing it.
  • Deposit receipt. To properly document qualifying cash assets, the applicant must deposit the sales proceeds and provide to the lender a copy of that bank deposit receipt.
  • Automobiles. If the asset being sold is a car, the applicant must also explain why that car is no longer necessary.

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