Which documents are commonly used to verify a borrower's assets?

• A. Bank statements, investment statements, retirement account statements, and gift letters if applicable
• B. Pay stubs and tax returns
• C. Credit reports
• D. Property appraisal

Answer: (A)

In mortgage underwriting, you verify a borrower’s assets with documents that prove there are liquid funds available for the down payment, closing costs, and any reserves. Bank statements show how much cash the borrower has on hand and reveal the regularity and source of deposits, which helps confirm the funds aren’t borrowed. Investment statements document the value of stocks, bonds, or mutual funds, indicating additional liquid resources the borrower could access. Retirement account statements indicate the potential funds that could be used, though lenders consider access rules and penalties and may treat these funds differently depending on the program. Gift letters come into play when the funds for the down payment or closings are a gift from a family member or other donor; the letter documents who provides the funds, the amount, and that there is no obligation to repay.

These asset documents are distinct from income documents like pay stubs or tax returns, which show earning ability, or a credit report and property appraisal, which relate to creditworthiness and collateral value rather than the borrower’s available assets.