The scrutiny of your bank statements that will take place by the Underwriter when you apply for a mortgage is much more thorough than in years past. Used to be, lenders only cared about your balance and if you had adequate funds to close, but today they will analyze every transfer, every deposit and ask that you source them (prove them). But by preparing in advance for this scrutiny you can save yourself a lot of time and aggravation from the need to verify many things on your bank statements.
When you apply for a mortgage loan, the lender will ask for your last 2 months bank statements in order to verify your assets. Any monies that were in your account prior to this 2 month look back period will be considered your funds (seasoned) and no further documentation will be required. It’s these 2 months that you can minimize the need for further documentation by following these tips.
· Do not make any cash deposit – Cash is an unacceptable source of funds since its origin cannot be established. If you have cash, use it for daily expenses and only deposit verifiable checks.
· Do not move funds from one account to another - If you have multiple accounts and move funds, you will be required to show all these documents. These could double or triple the amount of documentation you will need to provide.
· Do not have any overdrafts – This can be a killer for showing your ability to handle finances.
· Do not deplete your funds – Many times clients think paying down debt obligations with excess monies will show more stability. Check with your loan officer first because many loans require what is called monthly reserves (2-6 monthly house payments in reserve). You can always go pay down the debt but you get go get the money back.
· Make sure the address of record on your statement is your current address & if you have other co-account holders, you will need acknowledgments from them that you have unlimited access to all funds in the account.
By following these 5 tips and preparing in advance for the loan process, you will make the process a much easier one for yourself, saving the need for you to chase down extra documents to validate items on your statements.