First — When providing Bank Statements, there are a few key things to remember:
All Bank Statements: You want to be sure that you include ALL numbered pages of each bank account or other asset statement. Example: "Page 1 of 8" might be nothing more than a cover sheet and page "8 of 8" might be nothing more than blank or an advertisement.
For Business Bank Statements: Use of funds held in the name of a business will cause additional documentation requirements such as evidence of what percentage of that business the applicant owns, a signed CPA letter stating that the use of funds from the business account will not have an adverse impact on the operation of the business and a cash flow analysis of the business to support the CPA letter. Funds held in the name of a trust will require the lender to be provided with a complete copy of that trust in order to document the applicants' ability to withdraw funds at will.
Next — Large Deposits — This can be anything of $500 or more and even less with some loan types. Anytime you have a deposit that is not listed as coming from your employer you'll need to provide documentation to evidence the "source" of these funds. Mutual funds, stock accounts and IRA's cannot be used towards closing costs unless the portion needed to close has been liquidated no less than one week prior to closing with acceptable evidence.
Why? — To assure that any funds finding their way into your accounts or your transaction are not borrowed. Even private loans have corresponding payments and we have to assure that any debt is accounted for and included in your qualification calculations.
What? — When you have large deposits or transfers into your account, you'll need to provide documents such as a copy of the check or wire, deposit slip or confirmation and possibly a written explanation. For transfers, the statements for the source account will need to be provided and if there are also large deposits there, the same rules will apply. It's simply a matter of evidencing that it's your money rather than a loan and it has to be tracked along its path from origin to your account.
Planning Ahead is the key and though it's not likely part of your usual habit, simply get in the swing of making copies of checks that you will deposit and put them together with the corresponding deposit slip. Don't bunch checks and cash together to make one big deposit that will be hard to decipher. Do make individual deposits to stay under the limit whenever possible and fully document any that exceed it. When in doubt — remember that we're always here to answer your questions. Reach out anytime using the contact info below.