Season Assets Two Months Before Applying for a Mortgage

January 15, 2007 No Comments »

I already wrote a page about this, but it’s so important that I wanted to highlight it in a post as well.

Most mortgage programs offered with the majority of banks and lenders out there ask that you verify liquid reserves for “x” amount of months to prove that you have the available funds to make future mortgage payments.

However, many potential homeowners and homeowners alike apply for mortgages without seasoning their assets, and often run into problems when applying for a loan.

While you may not have the necessary verifiable assets, there are a number of ways around the problem. You can borrow money from a family member or a friend, and put it in your bank account two months before you apply for a loan. Or if you have cash lying around, get it in your bank account as soon as possible. This way the assets will be seasoned by the time the mortgage lender requests asset verification.

Though the assets may have come from a family member, friend, or any other unknown source, the money will be considered seasoned after two months, and thus won’t need sourcing. The issuing bank or lender will simply ask for a “VOD” (verification of deposit) which won’t show the source, just the average two-month balance of your account. The higher that number, the stronger you’ll look, and your odds of getting approved for financing will rise.

If you verify your assets, you’ll also save money by qualifying at a lower mortgage rate while increasing the amount a lender is willing to finance. It’s a must for anyone applying for a loan, and foolish to rush into a loan until you’ve got your assets in order. This goes hand-in-hand with credit organization. Keep in mind that you will not get a mortgage at 100% financing if you’re unable to verify your assets.

Some audacious mortgage brokers even furnish borrowers accounts with assets as a way of solving these problems, although it’s a bit of a “black-hat” technique which is probably best avoided.

Remember that most lenders request two months PITI (Principal Interest Taxes Insurance) for owner-occupied programs, four months PITI for second homes, and six months PITI for investment properties.

Never rush into a loan until you’ve got everything in order. You’ll kick yourself for not making small adjustments that could save you hundreds to even thousands a month on your mortgage payment.

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