Why Do Underwriters Question Irregular Deposits?


Irregular Deposits In Bank Statements

One of the most important things that a mortgage loan underwriter will request to start the mortgage loan application and approval process is 60 days of bank statements as well as other asset information such as investment accounts, and retirement accounts.  Part of the reason that mortgage loan underwriters ask for bank statements is to make sure that all funds are sourced and that the mortgage loan applicant has enough funds to cover the down payment and closing costs.  The mortgage loan underwriter will scrutinize the 60 days bank statements and look especially for irregular deposits.  What are irregular deposits?  Irregular deposits are money that is out of the ordinary.  All deposits in a bank account needs to be sourced.  For example, if a mortgage loan applicant makes $1,000 per week, then the $1,000 every Friday is sourced and the source is the mortgage applicant’s weekly pay check.  However, if there is a deposit for $2,560 one month and another deposit for $4,345 the following month and the mortgage loan applicant is planning to use both of these irregular deposits as the down payment and closing costs for his home purchase, then the mortgage loan underwriter needs to see where those funds came from.  If those deposits were cash from a sale of personal belongings from a garage sale, those funds cannot be used to document and verify that he or she has enough funds for the down payment and closing costs.  However, if those two irregular deposits came from tax return refunds from the IRS, then a copy of the check as well as the deposit slip needs to be provided to source the irregular deposit.

If the two irregular deposits were from a sale of a high ticket item such as a vehicle, then it can be used by supplying the mortgage loan underwriter with a copy of the check as well as the vehicle title transfer, bill of sale, as well as the deposit slip.

60 Days Of Bank Statements

Mortgage lenders only require 60 days of bank statements and only irregular deposits of those 2 months bank statements are looked at carefully.  Mortgage lenders do not care about irregular deposits that have been deposited in the mortgage loan applicant’s bank account that has been seasoned longer than 60 days.  If a mortgage loan applicant has mattress money ( Cash ) and cannot source the funds, then the only alternative to document this cash for the down payment and closing costs is to deposit it to their bank account and let it season for 60 days.  This way there is no questions asked and sixty days later, the funds will already be in their bank account without any irregular deposits.

Main Reason Why Mortgage Underwriters Are Looking For Irregular Deposits

There are a few reasons why mortgage loan underwriters ask to see 60 days of bank statements and look for irregular deposits.  Mortgage lending guidelines require that the mortgage loan applicant can come up with the mandatory down payment and closing costs.  The down payment can be gifted for FHA loan programs.  Mortgage lenders want to see that the down payment was saved by the mortgage loan applicant.  Mortgage loan underwriters do not want to see that the irregular deposits came from another loan or credit that is not reflected on the credit report.  By taking out another loan, it will affect the mortgage loan applicant’s debt to income ratios.  This is the main reason why mortgage loan underwriters need to see the source of any irregular deposit and if the funds cannot be sourced, then those funds cannot be used in qualifying the mortgage loan applicant.

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