What lenders mean by assets are funds that you are able to put into your home purchase transaction. These are funds to be used for the down payment, closing costs, asset reserves, and so forth.
What lenders like more than anything are what are called “liquid assets.” “Liquid” means cash or a cash equivalent, such as money sitting in a bank account. This also includes available money from a retirement account that could be transferred into a bank account.
People often ask whether cars, motorcycles, jewelry, and other items they own could be considered assets.
The short answer is no. One challenge here is that in those forms, they aren’t considered liquid. Another is that the lender would have no way to determine their true value without having them appraised, and this would make financing your home much more complex.
If you have items you plan on selling to put money into the transaction, that’s fine. What needs to happen, though, is the source of those funds and where the proceeds went need to be fully documented.
An example of this would be your selling a car on March 14 for $3,500 cash and putting the money into your bank account a day later. A lender may ask for a copy of the bill of sale and bank statements showing the deposit.
If you have questions about how assets work in the mortgage process, please give us a call, and we would be happy to answer them.