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Why Do Mortgage Need Bank Statements

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Why do mortgage lenders need to see your bank statements? | Mortgages Explained

If we need to see the deposit in your bank account statements, well let you know in your Decision in Principle.

The number of bank statements well need depends on the location of your savings account:

  • Within the UK and European Economic Area well need to see 1 statement.
  • Outside of the UK and EEA well need to see 3 months of statements.
  • If we do not need to see your deposit, we wont ask to see any bank statements.

Providing Proof Of Funds

Simply having money in your bank account does not guarantee that you will get a home loan or that the funds are legitimate. Your lender will want proof that the funds belong to you, and that the source of the money and how it was deposited is legitimate.

The best way for the lender to determine proof of funds is by looking at least 30 days or more of bank statements. Your lender will go through these documents and verify that all of the assets you included on your loan application actually belong to you.

What Underwriters Look For On Your Bank Statements

The underwriter the person who evaluates and approves mortgages will look for four key things on your bank statements:

  • Enough cash saved up for the down payment and closing costs
  • The source of your down payment, which must be acceptable under the lenders guidelines
  • Enough cash flow or savings to make monthly mortgage payments
  • Reserves, which are extra funds available in case of an emergency
  • An underwriter generally wants to see that the funds in your bank accounts are yours, and not borrowed from someone else .

    In other words, any funds used to qualify for the mortgage need to be sourced and seasoned.

    Sourced means its clear where the money came from, and any unusual deposits are explained in writing. And seasoned typically means the money has been in your account for at least 60 days.

    Bank statements also prove to underwriters that you havent opened up any credit accounts or created new debt prior to getting the mortgage.

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    How Do I Submit My Bank Statements To My Mortgage Lender

    Nowadays, most mortgage companies will accept electronic PDFs of your bank statements that you can download from your online banking login page .

    Some lenders do require hard copies of your bank statements in some cases, and these can be posted to you from your bank upon request.

    Your mortgage broker will advise on the best method for your particular application and will walk you through the process at the time.

    Can You Use A Gift As A Down Payment On A House

    Why Does My Mortgage Lender Need My Bank Statements ...

    If a parent, sibling, or grandparent offers to gift funds for your mortgage expenses, you may not think to disclose this information to your lender. From your perspective, as long as you arrive at closing with enough funds, you should be okay, right? Unfortunately, it’s not that simple.

    Even though lenders do allow gift funds, they also require mortgage applicants to disclose the source of these funds. Remember, when applying for a mortgage loan, the lender needs a clear picture of your financial situation. This includes information about your employment, income, and assets. This is why a lender will ask for copies of your most recent bank statements. The purpose of reviewing your bank statements is to ensure you have enough in reserves for mortgage expenses. But sometimes, a family member offers to pay these expenses as a gift to you.

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    Bank Statement Warning Signs

    Overdraft charges

    Having a long list of overdraft charges in your account isnt the best indicator that youll be a good borrower. No matter the circumstances, having a history of overdrafts or insufficient funds noted on your statement shows the lender that you might struggle at managing your finances. This isnt always a deal breaker, but an underwriter may request a written explanation.

    Large deposits

    Another red flag to lenders is when a bank statement has irregular or lump-sum deposits. We need to make sure your funds are coming from an acceptable source. A large deposit is the sum of all deposits, not including payroll, which exceeds 50% of your gross monthly income. So if you earn $5,000/month, then the sum of your deposits must be less than $2,500, otherwise well need to verify each of the deposits. Cash aka mattress money is not acceptable. Gifts and third party loans need to be explained, verified and documented appropriately. Unless you can provide acceptable documentation to paper-trail the large deposit, its likely well disregard those funds, lowering your bank account total of acceptable funds for your down payment.

    Activities To Avoid Between Mortgage Pre

    This is a guest post by Blair Warner, senior credit consultant and founder of Upgrade My Credit

    You’ve just found out you’ve been pre-approved for a home loan!

    That’s great news! Whether you’ve found a home you want to buy or you’re still out there house shopping, there’s something you need to know now that you’ve secured the financial backing of a lender: it’s important to keep your credit in good standing from now until closing day. What does that mean, exactly? Follow our tips below to learn more:

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    Bank Statements In The Mortgage Process: Printouts Versus Statements

    If borrowers provide lenders two months work of bank statement printouts and not actual bank statements, there is no overdraft or YTD overdraft section on most bank statement printouts:

    • Bank statement printouts are allowed in lieu of bank statements
    • Borrowers need to go to their bank and see a teller
    • Ask them to get you 60 days of bank statement printouts
    • Borrowers need to get the printouts dated, signed, and stamped by the teller
    • As long as there are no overdraft fees or overdrafts on bank printouts, which most do not have, borrowers will be safe during the mortgage approval process

    I strongly recommend that all consumers get overdraft protection on all of the bank accounts.

    Why Do Mortgage Need Bank Statements

    Why Do Lenders Request Bank Statements

    4.6/5MortgageNeed Bank Statementsmortgageneedbank statementswantmortgagefull detail here

    No, a bank statement will be used to verify your income and your outgoings, but they are not the only factors that affect your affordability or mortgage eligibility.

    Subsequently, question is, do mortgage lenders verify bank statements? Understanding How Lenders Verify Bank StatementsWhen buying a home, the mortgage lender may ask the borrower for proof of deposit. The borrower typically provides the bank or mortgage company two of the most recent bank statements in which the company will contact the borrower’s bank to verify the information.

    Besides, how many months of bank statements do mortgage lenders require?

    three months

    What underwriters look for in bank statements?

    Underwriters are thoroughly trained to pinpoint all unacceptable sources of funds, hidden debts and other red flags by analyzing your bank statements. If you or an automatic payment have withdrawn funds from your account that you did not have, your bank statement will show NSF or non-sufficient funds.

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    Things Mortgage Lenders Dont Want To See On Bank Statements

    You might want to take a look at your bank statements with a mortgage underwriters eye before turning them into the lender.

    Thats because the lender looks for red flags that, if found, can require lengthy explanations.

    Mortgage underwriters are trained to unearth unacceptable sources of funds, undisclosed debts, and financial mismanagement when examining your bank statements.

    Here are three things you can look for on your bank statements that might turn up a red flag for a mortgage company.

    What Am I Reviewing On Your Bank Statements

    Christopher Ulrich

    Vice President, Mortgage Lending

    Whether you are purchasing or refinancing a home, we need to review bank statements. Its important to know what we are looking for to prepare yourself for a smooth process.

    In addition to assessing whether or not youre able to regularly make your monthly mortgage payments, another role of mine is to make sure you have enough money for a down payment and closing costs. Part of how we do this is by reviewing your bank statements. However, we look a little deeper than just your account balance when approving or denying you for a home loan.

    Its important to make sure all your documents and records are sorted and straightforward before applying for a home loan.

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    Why Do I Have To Provide Bank Statements

    Mortgage lenders require you to provide them with recent statements from any account with readily available funds, such as a checking or savings account.

    In fact, theyll likely ask for documentation for any and all accounts that hold monetary assets. Why is this? They want to know that youll be able to afford your down payment and make your monthly mortgage payments. So, your lender will look at your assets and see how much cash you have available to you if you were to need it.

    Each lender will have its own requirements for how many months worth of mortgage payments it expects borrowers to have saved up . Keep this in mind when youre preparing to start the home buying process.

    What Will Underwriters Consider As An Acceptable Bank Statement Doc

    Why Do Lenders Request Bank Statements During Mortgage Process

    Online banking has made it easier than ever to track your spending, deposit money, pay bills, and even deposit checks. When it comes to collecting bank statements for your loan, underwriters are very particular about what they will accept. The best thing you can provide is an actual bank statement, the statement you receive at the end of every cycle. At the beginning of your process, you should always submit 60 days of actual bank statements to your loan officer.

    What happens when you need to verify your deposit check cleared or show proof of funds to close and an actual bank statement hasnt dropped for that cycle yet? You can provide transaction history. Here is where things get tricky. Although online banking makes it easier to print your transactions it does not necessarily provide enough information to verify that the account is yours, or printed from your online application. It may sound silly but an underwriter needs the URL at the bottom of the statement, it needs to be able to be linked to you, and they need to verify the financial institution.

    Most bank statements do not provide all of this information on transaction history and it can cause a lot of frustration. A lender will accept a transaction history without this information as long as it is stamped and signed on all pages by a bank employee.

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    What Constitutes A Large Deposit

    Large deposits to your bank account will be scrutinized by the underwriters. But, what constitutes a large deposit? It depends on your loan program, loan amount, and your income. An underwriter is going to view your entire loan application to determine which amount you may need to verify a deposit over.

    Consider if you have just enough available in your checking account to cover your funds to close and not much wiggle room. An underwriter can require you to verify a deposit of just $100!! You need to always be careful depositing cash while you are going through the loan process. A cash deposit no matter how small can cause an underwriter to request you to source the deposit. Any deposits that are obvious like payroll, social security, and retirement most likely will not need to be sourced.

    Sourcing, simply put, is showing evidence of where the money came from. A deposit can be difficult if it is cash or a personal check or money order. If you are not able to source a deposit to the underwriters liking they can remove the deposit out of your total funds they have approved for closing. In other words, if you cant source a $500 deposit the underwriters may not allow you to use it for closing costs leaving you $500 dollars short.

    Always check with your loan officer before depositing anything out of the ordinary into your account during the loan process, they will be able to help you determine if this will hurt your loan or it is safe to deposit.

    What Information Do These Documents Contain

    Bank statements and transaction histories have to include certain details in order for a lender will accept them. The information they contain is slightly different. For a bank statement, which may be digital or physical , lenders will want to see the following information:

    • Your name
    • The period covered by the statement
    • The accounts opening and closing balances
    • A list of transactions during the period covered

    Transaction histories may come in the form of a screen shot you’ve taken on your computer screen. They will contain less identifying information but should include the following information:

    • Your account number
    • A list of transactions for the period covered
    • A running balance

    Some online lenders may ask to securely access your banking app to assess your transaction history directly.

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    Solution To Bank Statements With Overdrafts And How Underwriters Analyze Bank Statements

    Mortgage lenders require borrowers to only provide 60 days of bank statements:

    • What if borrowers did not have any overdrafts in the past 60 days in bank statements but had overdrafts prior to the 60 days?
    • Borrowers provide actual bank statements for the past 60 days
    • If there are no overdrafts it is fine
    • But if they had overdrafts prior to the 60 days, there is a column in bank statements that lists year-to-date overdraft fees
    • This will alert the underwriter that they had bank overdrafts in the past 12 months
    • If this is the case, borrowers should not submit actual bank statements
    • What they need to do is go to bank and get 60 days of bank statement printouts
    • On bank statement printouts, there are no year-to-date overdraft fees column
    • A print out of bank statements can be used in lieu of actual original bank statements
    • Borrowers with bank overdrafts in the past 12 months, go to bank and get 60 days of bank printouts and get those printouts signed, dated, and stamped by the bank teller

    Borrowers with recent overdrafts and do not have any other bank accounts without overdrafts, then the only solution is waiting sixty days and let the overdrafts season for 60 days.

    Why Do Lenders Ask For Bank Statements

    Mortgage Payoff Statement: What is it and Why Do I Need One?

    Lenders and underwriters sometimes ask for bank statements when deciding whether to approve a mortgage application. Bank statements reveal a lot about your spending habits, which can be daunting at first thought- but its important to remember they could help you evidence that you can be a reliable borrower, even with issues like bad credit.

    The lender has a legal responsibility to make sure they lend responsibly- primarily this means making sure you can consistently and affordably meet mortgage repayments over the term of your loan- before agreeing to lend the money, and to take the necessary steps to ensure that they are keeping clear of fraudulent activity.

    This comes in many forms, like proving your employment or income source, your expenditures, existing credit commitments and so on, but your bank statements could back up a lot of this information in your mortgage application. It is important to note these statements may also flag any spending habits that could create concern for a potential lender.

    Your bank statements can allow the underwriter assessing your application to get a clear overview of your finances and spending, which in turn allows them to make a judgement on whether to approve the application.

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    The Bank Statement Loan Application Process

    To apply for a bank statement loan, you can upload the last 12 or 24 months worth of bank statements from a business account into the system or have our digital mortgage software sync with your bank and pull the information from your account. Bank statement loans are processed through a manual underwriting process. Since these loans are being reviewed by a person, they can take between 21 and 30 days to process. For more complex cases, it may take up to 45-60 days.

    How To Get Your Bank Statements From Macquarie Bank

    Bank statements:

    1. Log in to Macquarie Online from the Macquarie Bank homepage.

    2. To download your statement from the last 6 months, select Accounts & Statements then Statement Files.

    3. A list of available statements will generate. Download the most applicable file by clicking Download statement file. This will download to your computer as a PDF where you will be able to print it.

    Transaction history:

    1. Log in to Macquarie Online from the Macquarie Bank homepage.

    2. Select Accounts & Statements then Account List.

    3. A list of accounts will generate. Tick the box of the account you wish to generate a transaction history for, then click Find & view transactions.

    4. You will be asked to fill in the search criteria. Fill in the date period and any other details you wish to specify for then click Find transactions.

    5. A transaction list will be generated.

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    Providing Proof Of Legitimacy

    Bank statements only show the funds in your account they dont automatically legitimize the money in them. The number one credit item that causes problems with potential homeowners applying for a home loan is cash deposits. These deposits can be difficult because lenders need to make sure that the deposits werent structured to avoid reporting requirements. Lenders will scrutinize each and every cash deposit made to your account when you are trying to obtain a home loan.

    Depending on your lenders requirements, you may need to write a clear and concise letter of explanation for each deposit. If a loved one decides to gift you your down payment for a home, this transaction will also need to be documented with a notarized gift letter.

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