Hand Stacking CoinsBorrowing money is almost always a necessity when buying a house in Kansas, but it doesn’t you should rely on financing completely. To consider you qualified for the mortgage, most lenders look for three types of funds: down payment, cash for closing costs, and asset reserves.

Before you shop around for homes for sale in Olathe or Topeka, do the following to show that you’re capable of taking out a loan:

Exhaust All Options

The money in savings or checking account is a universally accepted type of funds borrowers use. However, you can also use investments to prove your liquidity and bolster your creditworthiness. If you don’t have sufficient cash in hand, you can utilize proceeds from their sale to cover the down payment or other fees at closing. If you have an individual retirement account, you may be eligible to take out $10,000 for a home purchase.

Also, lenient lenders allow the use of gift funds. For as long as they legitimately come from a donor, receiving a large sum of money wouldn’t affect your capacity to pay the mortgage.

Season Your Money

Regardless of the type of funds, lenders want to know that the money didn’t just magically appear out of thin air. You need to keep your assets where they are for at least two months. This way, your prospective lender could verify whether they’re legitimate savings or not.

Some borrowers try to acquire new debts to meet the asset and cash reserve requirements. Doing so would increase your debt-to-income ratio and lower your credit score, and therefore your hurt your chances of getting your mortgage application approved.

Provide a Paper Trail

You can’t just transfer money here and there. As a borrower, you ought to track your funds properly and prove their legitimacy with papers. Recent bank statements and letters from certified accountants are some of the verifiable documents you could show your lender.

Mortgage borrowers are subject to scrutiny for good reasons. Apart from protecting the lending party from financial losses, strict procedures screen out applicants with questionable credit to help prevent a housing market crisis.