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 On July 28, 2017

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. 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 loan 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 loan underwriters look for red flags when reviewing mortgage applicant’s bank statements.

  • First thing they look for is overdrafts and bounced checks
  • Many mortgage lenders will deny mortgage loans if the mortgage 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 and 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 mortgage lenders.
  • Overdrafts are viewed negatively by all lenders.

Home Loan With Bad Credit

The Gustan Cho Team specialize in originating and funding bad credit mortgage loans,

  • I have mortgage lenders who will take into consideration for having an overdraft or bounced check in the past 12 months. 
  • These mortgage 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.

Irregular Deposits

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.

Documents Required

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.

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 at 1-800-900-8569 or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

Related> Home Loan With Bad Credit

Related> Overdrafts In Bank Statements

Related> Why Are Overdrafts In Bank Statements Scrutinized?

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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