Understanding Asset Reserves

Reblogger Lora "Leah" Stern 914-772-4528
Real Estate Agent with Coldwell Banker, 170 N Main Street, New City NY 10956

In order to qualify for many of today's mortgage products a buyer would need to have enough funds to cover down payment, closing costs ( this includes lender fees, attorney fees etc) and in many caese, asset reserves.  What exacgtly are asset reserves and how much in reserves are you required to have?More About Rob Spinosa gives a great explanation of asset reserves and how, even if not required, having several months of reserves goes a long way to strengthening your financial package and getting that loan approved.

Original content by Rob Spinosa NMLS: 22343
RPM Mortgage in California

Understanding Asset Reserves


Most first-time home buyers have a fundamental grasp on the fact that they will need to come up with down payment funds in order to close their transactions. Perhaps the move-up buyer also takes into consideration the total settlement charges needed; things such as lender fees, title and escrow costs and pro rata interest. But it’s a safe bet that even the financially savvy are not especially familiar with a third category of asset qualification, those that we in the lending industry classify as reserves.


Simply put, reserves are the funds that a borrower has left over after the close of escrow. And lenders measure reserves in months. So, for example, if you have a Mortgage Reserves $3000 total monthly housing payment (or "PITI" for "principal, interest, taxes and insurance"), and you have $36,000 worth of total assets in your accounts post-close, you have 12 months of reserves. Various loan programs will have differing requirements on reserves (especially jumbo loans), while some have no minimums (like FHA loans). But in general, and even if not required for approval, reserves can provide additional strength to a borrower’s profile for the obvious reason that should a financial hardship befall the homeowner, reserves could theoretically be used make the ongoing mortgage payments and keep the loan current.


What counts as reserves? This is a trickier question. It’s a safe bet that all liquid funds can be included in the lender’s total. Checking, savings and money market Mortgage Reservesaccounts are of the first order. Investment portfolios containing stocks, bonds and mutual funds can typically be factored into the reserve calculation as well. Where things get a little more dicey is with retirement accounts --- often a place where borrowers retain a good portion of their savings. Usually a mortgage lender will only consider 60 to 70% of the vested balance of a 401K or IRA when calculating eligible reserves from these sources, this to allow for taxes and penalties that could be incurred.


Your mortgage professional has an understanding about the reserves you must document for your current loan application, and has a sense about the funds that  should be included to create the strongest file.  Regardless of with whom you may be working, I’m available to answer any questions on this subject at any time.



Robert J. Spinosa

Home Loan Professional
BRE: 01297944 NMLS: 22343

1058 Redwood Highway
Mill Valley, CA 94941

877.270.5959 Toll Free
415.367.5959 Cellular
415.366.1590 eFax

Rob Spinosa



This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Lending / Financial
1st Time Buyers
Buyer Information - What Buyers Need to Know in Today's Market
Mortgage Marketing Tips and Strategies
Advice for Buyers
asset reserves
home buying

Spam prevention
Show All Comments
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Thank you Robert that was truly an important blog to inform us on asset reserves. 

Oct 06, 2013 03:34 AM #1
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Tim, thanks for stopping by and Rob did a great job of spelling it out for us.

Oct 06, 2013 03:54 AM #2
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Condo and Home Specialists

Nice way to explain this. It can be so confusing. Seeking a professional mortgage consultant should be the first step in the home buying process...

Oct 06, 2013 04:04 AM #3
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Leah, Great re-blog.  Rob is on smart lender.  I had the pleasure of meeting him at our last meet-up.  

Oct 06, 2013 05:28 AM #4
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

You guys are two people I'd love to meet in person.  Thanks for stopping by.

Oct 06, 2013 08:57 AM #5
Patrick White
Home Driven Realty, Inc - Baldwin, NY
Driven to bring New Yorkers home

Good Evening Leah


Thanks for the informative post and re-blog. Have a great week.

Oct 06, 2013 09:39 AM #6
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

great reblog and i am sure others will benefit from this post

Oct 06, 2013 10:03 AM #7
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730
Leah, rob's posts are so informational and this one is no exception. I will go over and tell him so. Have a good week.
Oct 06, 2013 06:37 PM #8
Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo
Leah-that was a great post about asset reserves. Thanks for reblogging!
Oct 10, 2013 12:44 PM #9
Jerry Newman
Brown Realty, 210-789-4216,www.JeremiahNewman.com - San Antonio, TX
Texas REALTOR, San Antonio Military Relocation

Hi Leah. This was certainly a great post to re-blog. Asset Reserves can be a huge stumbling block for many buyers, who are not truly prepared. Have a Blessed Day.!

Oct 11, 2013 02:32 AM #10
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Jerry - It's something all too many buyers are not aware of and can make the difference between getting that loan or not.

Oct 12, 2013 11:59 AM #11
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Lora "Leah" Stern 914-772-4528

Real Estate Salesperson
Ask me a question

Additional Information