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.
