Asset Qualifying

About the Product:

·         Borrowers can use liquid assets (and in certain cases, retirement funds) to assist in meeting full doc DTI requirements.  No formal distribution agreement is needed.

·         This calculation can be used for ALL or PART of a borrower’s qualifying income, and is used most frequently for complex income scenarios such as self-employed, retired, trust income recipients, corporate buy-outs, and divorce situations.

·         Post-closing assets are annuitized at a rate of 5% to age 85 or over 30 years, whichever is less, but never less than 10 years

·         For every $1,000,000 in post-closing liquidity, Ass $5,000/month in other income to qualify

Important Features of Asset Qualifying Income

            ·         Loan Amount:             $300,000 to $2,000,000

           ·         Minimum Fico:            680

            ·         Max LTV:                     70%

            ·         AQI is added to document income

            ·         Max DTI                      40%

            ·         Rate 5.75% 1.5 LD

            ·         7/1 ARM

            ·         $100,000 In Asset adds $537 / month for age 55 or less

            ·         $100,000 in Asset adds $660 / month for age 65 or less

            ·         $100,000 in Asset adds 1060 / month for age 75 or less


Important Points on the product:

        · Eligible Assets
                        > Cash equivalent – CDs, Money Market, Savings, Checkings
                        > Trust Funds and investment portfolios – stocks, bonds, mutual funds, etc.
                        > Retirement accounts if the borrower is of retirement age.

· Advantage for retired borrowers due to shorter annuitization period.

· Subtract down payment before calculation and required reserves before calculation.

·  Required 12 months full debt service – includes PITI on subject + all other payments.

Asset Qualifying Income – Example

    Borrower is 73 years old with income of $5,000/month. Her DTI is high and she needs addition income to qualify.

    However, the borrower has $1,000,000 in “allowable” post-closing reserves after down payment and minimum reserve requirement.

    Therefore, the calculation based on the borrower’s age is

    Present Value = $1,000,000
    Rate = 5%
    Amortization = 12 years (the borrower is 73 years old)
    Result: $9,249 additional income per month for qualifying purposes.
    The borrower now has $5,000 income + $9,249to qualify with

>    Add $9,249 to “other income” as asset depletion on your 1003