This might be a bit too obvious but there are other reasons why lenders want to see copies of your bank statements besides seeing how much money you have. One of course is in fact to see how much money you have but not enough just for your down payment. There are a few loans out there that don’t ask for a down payment, but those are typically government-backed programs such as VA and USDA programs. Lenders also need to know if there are enough funds available for closing costs. That might also be a bit obvious but there are two basic types of funds, recurring and non-recurring.
Recurring closing costs are those that will happen again in the future. What type of closing costs will happen again in the future? Think property taxes and homeowner’s insurance. There needs to be enough verifiable funds to cover those as well. And for those who need or choose to have escrow or impound accounts, there may also be a requirement to have a couple of months of both taxes and insurance available, too.
These smaller amounts will be used to initially fund your escrow or impound accounts. Finally, there are interest charges. When you close on your new home, the lender will ask for a per diem amount of interest to be collected up to the first of the following month. If you close on the 20th, lenders need 10 days of interest to be collected. This in essence is your first month’s payment.
For more information on why lenders want to see your bank statements visit the Scoop Blog
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