Instead of qualifying for a mortgage based on your income, an asset qualifier mortgage means lenders may qualify you based on your liquid assets.
What is an Asset Qualifier Mortgage?
When you apply for a mortgage, one of the primary factors the potential lender will take into consideration is usually verification of income. If your verified income won’t be a sufficient number for any reason, another option available to you may be an asset qualifier mortgage.
Asset qualifier mortgages allow a lender to extend a loan to the borrower based on liquid assets such as a savings or checking account, stocks, or retirement account. The lender will look for the sum total of assets after closing and potentially approve you for a loan based on the funds you have available, regardless of your income.
What Does a Lender Verify for an Asset Qualifier Mortgage?
When a lender is considering your application for an asset qualifier mortgage, they will want to see asset statements for both liquid and nonliquid assets.
Your liquid assets are the primary focus for the lender. They will want to see bank statements for all savings and checking accounts, as well as retirement funds, money market accounts, and any other liquid assets you may have.
Generally speaking, the lender is looking for liquid assets to add up to a certain number. That number will vary depending on the loan amount you are seeking, but in most cases the total number of your assets divided by 360 (for a 30-year term) is considered your qualifying monthly income.
Lenders will also run a credit check. Even with substantial verified assets, your credit score will be an important component in getting the best terms on your loan.
Who is the Best Fit for an Asset Qualifier Mortgage?
An asset qualifier mortgage is ideally suited for a borrower who has considerable assets, but is without consistent, documentable income. This might be someone who is successfully self-employed but is paid irregularly. It may also be right for retired borrowers who do not have documentable retirement income, but have substantial savings and non liquid assets.
Another great candidate for an asset qualifier mortgage is someone who lives off of investments, with little to no taxable income, leading to many lenders to not approve you for any mortgage at all or not be willing to qualify you for the amount you know you can afford.
If you have significant assets set aside, you may not want to deplete this assets to purchase a property, even if you do have the cash available to do so. Allowing you to leverage your assets while keeping the majority of them liquid to continue growing them is one of the major advantages of an asset qualifier mortgage.
What Terms Can I Expect in an Asset Qualifier Mortgage?
Terms of an asset qualifier mortgage will vary. There are likely to be a variety of options available to you when it comes to how much down payment you will need, fixed-rate versus ARM loans, and the term of the loan.
It is possible to use an asset qualifier mortgage for a primary residence, a second home or vacation home, or even an income property. One of the biggest advantages of this unique type of mortgage is that it offers you ample flexibility in your investing.
Where Can I Get an Asset Qualifier Mortgage?
Not every lender is able to extend an asset qualifier mortgage as this is a unique loan program. If you think an asset qualifier mortgage may be the right fit for you, contact us today to see how we can help!
For more information on mortgages and home loans in Roseville CA or refinancing services for the entire Placer County California area or tips on buying a home, contact my office below or call me any time at (916) 847-7263
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