Selling Assets for Your Down Payment and Closing Costs
Sometime, homebuyers don’t have enough money for the down payment or closing costs when they apply for a mortgage, but they do own assets that they can sell to get the money. There are rules that must be followed, however, and it’s good to know those rules before selling assets or assuming you can use the money from the sale of your assets for your down payment or closing costs.
Here’s what you need to know if you are going to be selling assets to cover your homebuying costs.
Proceeds from the sale of personal assets are an acceptable source of funds for the down payment and closing costs, provided the person purchasing the asset is not a party to the transaction, meaning the purchaser cannot be the seller, the lender, or either of the real estate agents.
Lenders need to document the following things before the money from the sale of the asset can be used:
- The borrower’s ownership of the asset.
- The value of the asset, as determined by an independent and reputable source.
- The transfer of ownership of the asset, as documented by either a bill of sale or a statement from the purchaser.
- The borrower’s receipt of the sale proceeds from documents such as a deposit slip, bank statements, or copies of the purchaser’s canceled check.
If the amount of money you get from the sale of the asset is only a small percentage of the money you need for the down payment and closing costs, some of the documentation listed above may not be necessary.
Contact us with any questions you might have about this or anything else related to mortgages or credit.