Cheryl Knowlton: Hi everybody. Cheryl and Clay back at you.
Clay Johnson: Hello.
Cheryl Knowlton: Okay, so this is our fourth in our video series for this week on why to get your buyers preapproved before they go shopping for a mortgage. And we’re going to talk about the third leg in the stool, which is…
Clay Johnson: Assets.
Cheryl Knowlton: Yay.
Clay Johnson: Yes. It’s interesting because the biggest thing that keeps people from buying a home is down payment.
Cheryl Knowlton: And there are so many misperceptions on that.
Clay Johnson: There are so many misperceptions. You know, I teach a class on that, and we actually talk about them, there are 29 different programs in Utah. So we’re a great state for that. But also sometimes you get a little better program if you have a down payment, so one of the things we want to look at is are you doing a down payment? How much do you have? And how can we verify those assets? Because they do need to be verified and sourced as well. So we need to know where those came from. And a 60-day average is kind of the typical thing that we look at on that.
Clay Johnson: The other thing that we want to see that really helps to get your file approved is having what we call reserves, and that’s where you have a little money left over after you’ve done your down payment, and you’ve done your closing costs, and you closed on your home, how much do you have leftover? And if you have enough leftover to make some payments and a little bit extra, that’s always a bonus.
Cheryl Knowlton: So they’re not truly house poor.
Yeah. And hey, I’ll tell you a little secret. This is something that’s kind of new. So when somebody who’s a little shy on that income from their debt to income ratio, we can actually do what’s called asset depletion, and that’s where we say, “How much you have in your 401(k), IRA, liquid accounts?” We can look at that, divide that out over the 360 months, and help offset a shortage in income through asset depletion. The little secret thought we’d share with them today.
Cheryl Knowlton: That’s a pretty cool secret. I bet most real estate professionals had no idea that that existed.
Clay Johnson: Yeah. It saved a deal just recently where it’s kind of a rescue loan that we did here at our corporate offices.
Cheryl Knowlton: That’s amazing. And especially where we have so many self-employed individuals in the state of Utah.
Clay Johnson: So many. Yeah. A lot of entrepreneurship here in Utah.
Cheryl Knowlton: Yes. Which is a good thing until you’re trying to get a mortgage. So with that, we will see you back for our last segment in preapproval.
Clay Johnson: See you next time.