|
Personal property includes automobiles,
vehicles, boats, furniture, collections, heirlooms, antiques,
art, clothing, and practically everything you own except
for real estate. The mortgage application asks you to estimate
the value for these items.
The larger the loan amount, the more important it is for
you to provide details on your personal property. This is
because larger loans usually indicate larger incomes, and
lenders check to see if your personal property matches your
income. If it does not, this sends a "red flag" to
the underwriter and they take a closer look at your application.
You are not required to document the value of personal property
unless you intend to sell them to come up with your down
payment.
For those homebuyers who do sell personal property in order
to come up with their down payment, the verification process
can be arduous. Lenders are much stricter about documenting
this method of coming up with your source of funds.
Selling a car is perhaps the easiest to document. First,
you need to photocopy the registration that shows you actually
own the vehicle. You will have to provide a copy of the page
in the "Blue Book" that shows your model and its
value. Then you need to photocopy the bill of sale showing
the transfer to another individual and a copy of the check
used to purchase the vehicle. Do not get paid in cash because
that makes it impossible to show you actually received the
funds. Make a copy of the receipt when you deposit the funds
into the bank.
Other types of personal property are more difficult because
you have to show that you actually own the property and that
it actually has the value that you sold it for. This is a
little harder to do for most assets than it is for automobiles.
If you have records to show you purchased the property,
that would be helpful. You could also provide an old inventory
that documents ownership. To determine value, you may have
to contract with an independent appraiser or a specialist
who has the knowledge for that particular type of property.
If you cannot document the item’s value, the lender
will not view the sale as an acceptable source of funds.
Just like selling a car, you have to prove you own the item,
make a copy of the bill of sale, copy the check used to purchase
the item, and make a copy of your receipt when you deposit
the funds into your bank.
copyright 2000 by Terry Light and
RealEstate ABC
|
