How Underwriters View Overdrafts In Bank Statements

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How Underwriters View Overdrafts In Bank Statements

This BLOG On How Underwriters View Overdrafts In Bank Statements Was UPDATED On September 23rd, 2018

Overdrafts in is not allowed by most mortgage lenders.

  • Borrowers with overdrafts in bank statements in the past 12 months need to analyze how many overdrafts they have and see if any are in the past 60 days
  • Overdrafts in bank statements is seriously frowned upon by mortgage lenders
  • This is because it shows that they cannot manage money in the eyes of mortgage underwriters
  • I know of countless of business owners who are willing to pay the $35 dollar overdraft fees
  • The bank honors checks and will make the necessary funds to cover the overdraft the next day or two
  • However, that is not how mortgage lenders look at it
  • Lenders consider even a $5 dollar overdraft as serious
  • There are only a few lenders in the mortgage industry that will allow overdrafts
  • But there needs to be a good letter of explanation for it
  • Borrowers with one or two overdrafts in bank statements, it will not be a problem
  • Habitual overdrafts in bank statements month after month, the chances of getting a mortgage approval is most likely not good

Solutions To Overdrafts In Bank Statements

Borrowers with no overdrafts in the past 12 months but had overdrafts in bank statements over 12 months old have nothing to worry about.

  • However, if borrowers provides lender the most 60 days of actual bank statements and did not have any overdrafts in the past 60 days can still pose an issue
  • Underwriter will find out whether or borrower had overdrafts in bank statements in the past 12 months
  • How? 
  • Well, there is a column on actual bank statements that state the year-to-date overdraft fees
  • This section sticks out like a sore thumb to mortgage underwriters

60 Days Of Bank Printouts Versus Bank Statements

There is a solution to avoiding being asked or show borrowers had overdrafts in bank statements in the past 12 months.

  • It is not a trick and it is not mortgage fraud
  • It is a case of don’t ask, don’t tell
  • All lenders wants to see 60 days bank statements
  • Well, borrowers with prior overdrafts in bank statements the past 12 months but not in the past 60 days, providing 60 days bank statements is telling on themselves that they had prior overdrafts
  • This is because there is a column that shows year-to-date overdraft fees on it
  • However, bank printouts are allowed in lieu of actual bank statements
  • Most bank statement printouts do not show year-to-date overdraft fees
  • There is no ways of underwriters finding out of any overdrafts in the past 12 months
  • Bank account holders can get bank statement printouts by visiting bank and asking the teller for a 60 day bank statement printout
  • Tell the bank teller that they are applying for mortgage, have them sign, stamp, and date every single page of the 60 days of the bank statement printouts
  • There is not a column of year-to-date overdraft fees
  • Mortgage underwriters will take the bank statement printouts in lieu of actual bank statements

Qualifying For Home Loan With Direct Lender With No Overlays

Home Buyers and Homeowners who need to qualify for home loan with a national direct lender with no mortgage overlays can contact us at Gustan Cho Associates Mortgage Group at Loan Cabin Inc. at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. The Gustan Cho Team at Loan Cabin Inc. has no lender overlays on FHA, VA, USDA, and Conventional Loans. USA Mortgage are also correspondent lenders on bank statement loans for self employed borrowers and non-qm loans.

Gustan Cho

www.gustancho.com

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