Using Asset Statements to Secure a Home Loan: Strategies for Demonstrating Financial Stability to Lenders

Using asset statements to secure a home loan: strategies for demonstrating financial stability to lenders. Check out the best strategies here.

Using Asset Statements to Secure a Home Loan: Strategies for Demonstrating Financial Stability to Lenders
Asset Statement

Getting a home loan can be an overwhelming experience as there may seem to be a lot of steps to impress the lender. Lenders want to analyze every detail of your life such as tax returns, asset statements, income, and job.

However, this is necessary to show the lender that you are financially stable enough to re-pay the home loan. Let’s take a look at what are asset statements and some strategies to prove your financial stability.

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What Is an Asset Statement?

While applying for home loans, borrowers have to show the lender at least two consecutive months of all asset accounts that you have listed on the loan application. This includes retirement, savings, investments, and checking accounts.

The process allows you to document and prove the cash you require to buy a property, such as closing costs and down payment fees. It also proves where you receive your money from and your ability to save too.

Borrowers should note that they don’t have to disclose all accounts on the loan application. If there are some accounts that you are not using to buy the home, they don’t need to be mentioned on the application. However, if you plan to transfer money from or between these accounts, they have to be documented.

Why Do Lenders Need Asset Statements?

The biggest reason for the asset statement is that it helps the lenders ensure you have the money to make the deal and check what the source of your income is.

"Cash to close," or having the funds necessary to finish the deal, is the first step in the loan application process. When you apply, you have to have all the money or be able to specify where it will come from. Tell the lender up front if any portion of the funds you need to close are gifts from family members, bonuses, or commissions you anticipate receiving before closing. You should already have the remaining funds in your accounts.

The lender will examine your "sourcing," or the source of your funds. With very few exceptions, bank statements usually list the source of each deposit. Your employer appears as the source on the statements when your paycheck is put directly into your account.

The bank statements alone won't be sufficient to establish the source of the funds if you have typical deposits from several checks and cash. When you offer your lender the statements, you can give duplicates of the item(s) used to make up a generic deposit or wait for them to ask for the paperwork. Remember that you will often only be required to source deposits equal to or greater than 25% of your qualified monthly income.

In the mortgage application process, cash is by no means the king. It is not unusual to receive income in the form of small item sales or to have some funds saved up for a "rainy day fund." Sadly, there is no simple way to record the source of cash payments, and regardless of the source, cash deposits cannot be utilized in a loan transaction without proper paperwork.

An underwriter may even seek sources when they notice deposits on a statement. In the event that the deposit exceeds the average amount and regular deposits for the account, written justification and supporting evidence will be needed.

If the underwriter notices consistent payments being made from one of your accounts, more inquiries can be raised. These payments are referred to as secret debt if they are made for loans not shown on your credit record or application. Remain calm; this isn't always a terrible thing. Most likely, you anticipated that the recent opening of a rotating or installment loan would appear on your credit record. The solution is to record the new obligation with a creditor's statement and a succinct justification.

Best Strategies for Demonstrating Financial Stability to Lenders

Here are some ways to improve your standing the lenders’ eyes beyond the asset statements.

1. Know Your Credit Score

To start the loan application process, get a copy of the credit report and carefully read it. Check for any mistakes, obsolete information, or discrepancies that could be unnecessarily lowering your score. Making these corrections might improve your creditworthiness right away.

2. Beyond the Credit Score

Alternative lenders frequently use a more comprehensive strategy, whereas traditional lenders could place a greater emphasis on credit ratings. Some lenders evaluate things, including your income, work history, and general financial situation. Investigating these choices may lead to loans that are more understanding of your credit history.

3. Stronger Income Stream

Lenders value your ability to repay debts easily. One important metric for determining this is a steady income. A steady salary will help allay worries about your creditworthiness if your credit score isn't perfect.

4.Cosigners or Collateral

Your chances of getting approved for a loan might greatly increase by supplying collateral or having a reliable co-signer. While a cosigner with strong credit attests to your capacity to repay the loan, collateral acts as security for the lender. By lowering the lender's risk, both choices may result in a better choice.

5. Try Smaller Loan Amounts

If your credit is bad, you might be able to get a smaller loan more easily. You may show that you intend to borrow prudently and repay your loan on time by taking out a modest amount. Repaying a smaller debt successfully may open the door to better terms on bigger loans later in the road.

6. Strong Loan Application

This is your opportunity to create a good first impression on your loan application. Give a thorough and truthful account of your financial status, emphasizing your attempts to raise your credit score and handle money wisely. Do make sure to emphasize any good developments, such as recent stable work or on-time bill payments.

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7. Show Financial Discipline and Consistent Savings

A good method of showing that you are committed to prudent money management is to show off how consistently you save. Lenders frequently appreciate borrowers who diligently save up a percentage of their income for future requirements. Stress how your regular saving over time demonstrates your financial discipline. This demonstrates your commitment to bettering your financial circumstances, which helps allay worries from a bad credit history.

8. Choose Loans Carefully

Loans are not all made equal. Working with borrowers with bad credit is their area of expertise as lenders. Look into and locate these lenders; they may provide more accommodating terms and be more mindful of your predicament.

9. Prepare for Questions

Give your credit history some perspective if given the chance. Describe any mitigating factors, such unexpected medical expenses or a temporary job loss, that may have contributed to your bad credit. You may benefit by exhibiting responsibility and a dedication to wiser financial decisions.

10. Stay Patient

Rebuilding the credit and raising your chances of getting loan approval requires time. When attempting to handle your funds carefully, use patience and perseverance. Your chances of getting loans in better conditions will increase as your credit score steadily rises.


Now you know what is an asset statement and the best strategies to prove your financial stability to lenders! Do make sure to carefully go through all the documents before approaching a lender to get the best possible terms.