The mortgage market has been hyper-competitive for buyers over the past 18+ months.  Over that time frame, it has been an unprecedented seller’s market.  Recently we have seen a slight shift back toward a normalized market..  The market still has a long way to go before returning to a seller’s market.  However, buyers are now starting to see signs of small decreases in property value and fewer offers per transaction.

Since the housing collapse of 2008-2009, the number of new home starts has been well below the average.  The lack of sufficient new homes on the market over the past 15 years, has had a huge impact on the current market.  IN addition, due to heavier regulation post the 2008-2209 collapse lenders moved away from loans for clients with “non-traditional” income.

In the mortgage world, “traditional income” typically comes from a client who has a job with a paystub and W2.  This type of income is easily verifiable by the lender.  Clients with ‘non-traditional” income are still able to receive a standard mortgage.  To receive the mortgage, these “non-traditional” borrowers often face mountains of documentation.

In addition to providing, a great deal of documentation – these documents are often scrutinized line-by-line from the underwriter.  This long, drawn out process often leads to frustration on the clients end.  Due to numerous reasons, these files sometimes fall apart in the eleventh hour.

Many “non-traditional’ borrowers are not aware that there are easier, less documentation mortgage available.  These options make the process much easier and less stressful from start to finish.  Some high net worth self employed or retired borrowers have extensive, complicated tax returns.  These tax returns may not show the full picture of the clients income.  A perfect solution for these clients is the Asset Qualifier.

What Is An Asset Qualifier Mortgage?

An Asset Qualifier Mortgage is a loan that is designed for clients who have verifiable liquid assets in excess of the amount being borrowed.   The client using the Asset Qualifier Mortgage does not need to provide income documentation for loan approval.  This Asset Qualifier options eliminates the need for the client to provide stacks of tax returns and other income documentation.  There will also be no need for the underwriter to scrutinize every line of personal or business returns.

Although the Asset Qualifier Mortgage does not require income documentation, it is not an anything goes mortgage that became so widespread in the early 2000’s.  With the “liar loans’ of the early 2000’s where very little was verified and equity position was not much of a factor.

Today’s Asset Qualifier Loans require a 25% down payment (or 25% equity for a refinance).  The Asset Qualifier also requires a 700+ credit score.  These loans are typically only for a primary residence and not eligible for an investment property.  These are high quality loans for well qualified clients.

What Assets Are Eligible For This Mortgage Program?

For the Asset Qualifier Mortgage the lender will look at liquid assets.  Examples of eligible liquid assets are:

1. Bank accounts – checking, savings, certificate of deposits
2. Marketable securities – stocks, mutual funds, etf
3. Retirement accounts
4. Cash surrender of annuity or life insurance policy
5. Bitcoin
6. Proceeds of sale of documentable assets

The lender will value each asset type slightly differently.  For example:

1. Bank accounts and cash equivalent accounts are calculated based on 100% of face value
2. Marketable securities are valued at 80% of face value
3. Retirement accounts are valued at 70% of of face value.  If the client is of retirement age then those accounts are valued at 80% of face value.
4. Cash surrender of annuity or life insurance policy is valued at 100% of face value
5. Bitcoin – can be valued at 100% of face value.  However, to use Bitcoin the account would need to be liquidated into a United States Bank or Financial Institution.  The liquidated funds would need to be in the account for 60+ days.
6. Proceeds of the sale of documentable assets can be valued at 100% of face value.  For the sale of an asset to be eligible for the transaction it would need to be owned by the client for a minimum of 6 months prior to contract date

What Assets are Ineligible?

As you can see from the list above, not all assets are eligible for the Asset Qualifier Mortgage.  Some examples of assets that are not eligible include:

• Business funds
• non liquid assets
• Cryptocurrency other than Bitcoin (although this may change over time)
• Unexercised stock options
• Non publicly traded securities

How Do I Document My Eligible Assets?

To document any eligible assets, you will need to provide the most recent six months of bank statements.  Complete bank statements with all pages will be required.  The lender will review that bank statements carefully.  Any deposits that are more than 10% of the value of the account will need to be sourced.  To source a deposit, a reasonable explanation and documentation must be provided.

Is The Asset Qualified Mortgage The Right Program For Me?

The Asset Qualifier Mortgage will help many well qualified borrower that had previously been shut out of the mortgage.  It is also a great option for high net worth clients who are looking for a simple, low documentation option.  Any questions about the Asset Qualifier Mortgage – please contact me directly.