Sale of Personal Assets
If you’re buying a home and need money for the down payment, closing costs, or reserves, you can sell something you own, like a car, jewelry, or electronics, to help cover these expenses. However, the person buying this item from you should not be involved in your property purchase or the mortgage process. This keeps the transaction clean and straightforward, ensuring no conflicts of interest.
Documentation Requirements
When you sell a personal asset to help fund your home purchase, there are specific documents your lender will need to see. Let’s break down what these are:
Proof of Ownership
For anything you sell that has a title (a legal document showing who owns something), like a car, you need to show you owned it. This means providing the title or similar documentation to your lender.
Asset Value
If the money you make from the sale is more than half of your total monthly income (the money you plan to use to qualify for the mortgage), your lender will want to check that the sale price is fair. They’ll look for an independent, reliable source to confirm the item’s worth. If this source says your item is worth a certain amount, but you sell it for more, your lender will only count the lower, independently verified price when deciding how much money you have for your home purchase.
For example, imagine you decide to sell your car. An independent source, like a recognized pricing guide, says it’s worth $10,000, but you sell it for $12,000. For your mortgage application, your lender will consider you only having $10,000 from this sale, even if you’ve already sold the car and have the $12,000.
Proof of Sale and Payment
You also need to show that the item was officially sold and that you received the money. This can be through a bill of sale (a document that confirms a sale) or a statement from the person who bought the item. Plus, you’ll need to show proof you got the payment. This could be a deposit slip, bank statement, a copy of the buyer’s canceled check, or another document that clearly shows the money you received from the sale.
Recent Related Announcements
Fannie Mae makes updates and announcements that might relate to the sale of personal assets. For instance, on December 16, 2020, they issued Announcement SEL-2020-07. Keeping up with such announcements can provide you with the latest information and guidance on using the sale of personal assets as part of your home purchase funding.
References
For more details, visit Sale of Personal Assets of the Fannie Mae Selling Guide.