What Do Lenders Look In Bank Statements In Mortgage Process
This BLOG On What Do Lenders Look In Bank Statements In Mortgage Process Was UPDATED And PUBLISHED On October 25th, 2019
Every mortgage lenders require borrowers to provide 60 days of bank statements as part of the start of mortgage process.
- Mortgage Loan Applicants wonder why What Do Lenders Look In Bank Statements
- Not all bank statements need to be provided
In this article, we will cover and discuss what do lenders look in bank statements.
How Many Bank Statements Do I Need To Provide Mortgage Underwriters
Only bank statements with proof of down payment and closing costs need to be provided.
- Bank statements are reviewed initially
- Updated bank statements can be requested again prior to closing to make sure borrowers have verified funds
- Just because borrowers have excellent credit scores and great income is not a guarantee of a mortgage loan approval
A mortgage underwriter will scrutinize bank statements and will look for irregularities as well as odd deposits and withdrawals.
What Do Lenders Look In Bank Statements And How It Should Be Reviewed By Loan Officer
Overdrafts in bank statements is one of the biggest reasons of mortgage loan denials. Any bank statements with overdrafts in the past 60 days should not be turned in.
Mortgage underwriters look for red flags when reviewing mortgage applicant’s bank statements.
- First thing they look for is overdrafts and bounced checks
- Many lenders will deny mortgage loans if borrower has had a single overdraft or bounced check in the past twelve months
- Mortgage Loan Applicants looking for a mortgage approval need to watch bank account
- They need to make sure there have no overdraft or bounced checks
- Remember, that even though with perfect credit and excellent income, one overdraft or bounced checks can be cause for a mortgage denial by most lenders
Overdrafts are viewed negatively by all lenders.
Home Loan With Bad Credit
Gustan Cho Associates specialize in originating and funding bad credit mortgage loans,
- I have lenders who will take into consideration for having an overdraft or bounced check in the past 12 months
- These lenders would want a good letter of explanation and consider the overall picture of the borrower
They will not automatically deny the mortgage loan applicant for a mortgage loan just because they have had an overdraft or bounced check the past 12 months with a good letter of explanation.
Any cash deposits or withdrawals greater than $200 and not documented on bank statements requires a letter of explanation.
- This is Fannie Mae’s rules and guidelines
- Mortgage loan applicants with many undocumented deposits greater than $200 will not be able to use the deposit as sourced funds
Mortgage Loan Applicants who are intending on applying for mortgage loan, they need to document deposits.
- Cash does not exist in the mortgage lending world
- Mortgage applicants with large amounts of undocumented cash cannot use it as verified funds for down payment
Borrowers with cash need to deposit that cash in their bank account and let it season for 60 days.
What Do Lenders Look In Bank Statements On Overdrafts In Past 12 Months But Not In Past 60 Days
Mortgage Loan Applicants who had overdrafts in the past 12 months but not in the past 60 days should do the following:
- Do not submit 60 days bank statements
- Go to bank, ask teller for 60 days bank statement printout
- Have teller sign, date, stamp 60 days bank statement printout
- Bank Statements have YEAR TO DATE (YTD) Overdraft Fees
- Even if bank account holder has no overdraft in 60 days but did have overdraft in past 12 months, the YTD overdraft fees is self incriminating
- With bank statement printouts, there is no YTD section
One of two overdrafts in the past 12 months, or even in the past 60 days is not a deal killer when qualifying for a mortgage. Every lender has their own requirements on overdrafts. Some lenders may not allow an overdraft and may automatically deny a mortgage loan borrower with an overdraft. Other lenders may allow dozens of overdrafts with a good letter of explanation. Regardless, the loan officer should know their own lender’s policy when it comes to overdrafts in bank statements and What Do Lenders Look In Bank Statements. Mortgage Loan Borrowers who have overdrafts in bank statements and need a lender with lenient overdraft mortgage guidelines, please contact Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.