Sunday, September 18, 2011 - Article by: Lender411 Member
When you're applying for a home mortgage, you'll need to provide lenders with a full, detailed list of your assets and liabilities. Assets include all of your financial resources, such as retirement accounts, existing real estate and savings accounts. Liabilities include every credit card, every outstanding loan and even medical bill payments. Are you prepared for this disclosure?
For the purpose of a mortgage application, assets are categorized in liquid and non-liquid groups. Liquid assets are assets which you could theoretically access on a short timeframe, such as checking, savings, and stocks and bonds that you could sell to come up with cash. Non-liquid assets are things you own, but which you can't immediately turn into cash, such as existing real estate.
Just like you have to provide a list of assets, you must disclose all of your liabilities to potential lenders. This includes every outstanding credit card balance, all outstanding loans and any other money that you owe for any reason. If you have tax liens or payment arrangements set up for child support, alimony or even employment-related expenses, you must disclose them on a loan application.
How to begin preparing for full disclosure.
Don't fudge or leave off any debts, because lenders do pull your credit report and can ask you about liabilities that you fail to list. You'll want to be prepared for a full disclosure, so make sure you start well ahead of time to make sure you have the information and documentation you need.
Save account statements, credit card bills or any documentation pertaining to assets or liabilities once you know you'll be applying for a home loan. If you have the cash to pay down or pay off liabilities, do it before you apply for a loan, so lenders won't consider the liabilities when they're evaluating your application.
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