Your Bank Statements Can Be Your Best Friend or Worse Enemy when getting a Mortgage

When getting a mortgage it is important to know all the documentation you will need.  A short list is your most recent 30 days worth of paystubs, last two years w2's and complete tax returns.  You will also need the last 2mths retirement account and bank account statements(all pages).   When your loan is Underwritten(reviewed), the underwriter will go thru all these documents.  In this post I am going to talk about the issues you need to be aware of when it comes to your bank account statements. 

Deposits

The reason you are required to provide 60 days worth of bank statements is because the underwriter will review the last 60 days of your bank account.  So any "large deposit" must be documented.  "Large" is a grey area and can depend on the individual underwriter, I would say anything over $200.  Why is it important to know this???  You must be prepared to document these deposits.  If you received a gift of $500 from your parents, then you will need a gift letter signed by you and your parents.  You will also need proof of the Gift, such as the cancelled check that was written to you and/or a bank statement from your parents showing the money came out.  Again some of the exact documentation needed to prove this gift depends on the specific underwriter.  But you will need proof.  If you sold an item and deposited that money into your account, then you must prove that.  Let's say you sold a car, you would need a bill of sale and a copy of the title to the car.   

Transferring Money

Transferring Money is obvious; it is the transferring of money from one of your accounts to another.  When applying for a mortgage make sure you explain to your mortgage professional how much money you have in your accounts.  Once you apply for a mortgage DO NOT go transferring monies until you speak to your mortgage person.  By transferring money, you will have to most likely provide more documentation on where this transfer came from, etc.  And most important do not close one account and go and open another bank account.  This will also cause you headaches and force you to provide even more documentation.

NSF's

NSF stands for Non Sufficient Funds.   This is the same as a "over draft".  These are bad things to have to showing up on your bank account statements.  This means you have spent more money then you have.  This will obviously concern an underwriter.  Having one or two NSF's over 60 days is most likely not the end of the world.  But having multiple ones can be an issue, and may force the underwriter to not allow that account to be used for the mortgage.  Again, how many NSF's you are allowed to have will most likely depend on the underwriter.    But, trust me NSF's are bad!

Like the title suggest, your bank statements can be your best friend or worse enemy when getting a mortgage.  When applying for a mortgage make sure you discuss any concerns or fears you have with your mortgage professional.   And if you are looking for a reliable mortgage professional ask your realtor or friends for someone they have used or trust.  And ask for or read Testimonials for this mortgage professional.  DO NOT just go with a lender off the internet who is not local to you!!!  And make sure you know all your mortgage options and chose the best one for yourself.