Types Of Assets To Include On Your Mortgage Application

Here’s a quick tip when you’re filling out your mortgage application: Don’t underestimate the importance of including all of your assets. It could make a difference in the type of mortgage you qualify for and interest rate you receive.

We’ll walk you through the assets you should include to make sure you get the right mortgage loan for you.

Why Reporting All Your Assets Matters

When a lender goes over your home loan application, they’ll take a look at your credit score, total monthly debt and total monthly income as well as your overall net worth. Your net worth matters because it tells your lender how much money – between your income and assets – you really have.

You might wonder how net worth is calculated. Your lender will subtract all of the debts you owe from your total assets in order to calculate your net worth, which will give them a better picture of how much money you actually have.

Your net worth allows a lender to get a better picture of how you will make your mortgage payments, down payment and closing costs.

They’ll also take your assets into consideration to determine how you’d make your payments if you lost your job – could you stay afloat for a few months? Your lender can decide how risky of a borrower you are by taking a look at not only checking and savings accounts, but also the amount of equity you have tied up in assets.

Assets To Include On Your Mortgage Application

What are assets, anyway? Assets are items you own that have a monetary value. They are usually grouped into three categories: cash, cash equivalents and property. The value of your total assets usually increases throughout your life.

Your income and salary information will be required on your mortgage application – but this is not an actual asset. Let’s walk through each asset type in more detail so you can be sure you list everything of value on your mortgage application.

1. Cash And Cash Equivalent Assets

Be sure to list all of your cash and cash equivalents on your mortgage application. These assets include any cash you have on hand, the money in all of your checking or savings accounts, money market accounts, certificates of deposit (CDs) and more. In other words, any money you have in accounts that could be pulled out as cash should be listed.

2. Physical Assets

Physical assets include anything tangible that you own that’s valuable – anything that can be touched. Physical assets that can be sold for funds to be used to qualify for a mortgage include – but are not limited to – properties, homes, cars, boats, RVs, jewelry and artwork.

If you plan to use physical assets as assets to qualify, they'll need to be sold before you close on the home. Property value guidelines and the type of documentation required to qualify vary depending on the type of loan you're getting, so we recommend you speak with one of our Home Loan Experts about your personal situation.

3. Nonphysical Assets

Nonphysical assets aren’t as liquid – and they don’t have a physical presence like a house or car. Pensions, 401(k)s, IRAs, bonds, stocks and even royalties fall into this category. You might be able to get rid of them or even borrow from them, but it would require planning.

4. Liquid Assets

Any nonphysical asset that you can instantly convert to cash would fall into this category, like readily tradable bonds or stocks. Liquid assets are different from nonphysical assets because you can easily trade them for cash within a short amount of time.

5. Fixed Assets

There are some physical assets that may take longer to receive cash for, such as furniture, some real estate and antiques. This is because you have to work to sell them – it usually doesn’t happen instantly. Fixed assets’ values can change from the time that you buy them. You can report them as fixed assets on your loan application with their most current value.

6. Equity Assets

If you have any retirement accounts, stocks or mutual funds, these are considered equity assets. Be sure to include these on your home loan application.

7. Fixed-Income Assets

Fixed-income assets include any investment funds that have been lent in exchange for interest. This typically includes government bonds and some securities.

What Assets Are Most Important To Lenders?

Lenders will take all of your assets into consideration when you apply for a mortgage, but there are a few that tend to carry more weight. Your cash and cash equivalent assets and any liquid assets rank highly because they are easily and quickly accessible. In a bind, you could use these funds to pay your mortgage.

Physical assets also rank high on the list for lenders because you can typically convert them into cash quickly. Selling your car or jewelry often does not take long, so if you had to sell one car in order to make mortgage payments, you could do so in a reasonable amount of time.

How To Calculate The Value Of Your Assets

Some assets have a clear value, like cash and stocks. But you may have questions about the actual worth of some of your physical items, like your car, home or artwork. The best way to find out the most current value of these items is to hire an appraiser to review them and determine their value.

You can hire a car, real estate or art appraiser to view the current condition of your assets so you have an accurate n