Bank statements are essentially monthly or quarterly documents that summarize banking activity, either sent over through the mail, electronically or both. Bank issue statements help keep track of your money, regardless of the type of account, whether checking or saving. Mortgage lenders generally look at bank activity to verify that you have sufficient funds to make your monthly payments, in addition to being able to cover a down payment.
Lenders check to see whether your assets are sourced and seasoned, i.e, they have information on where your money is coming from and that your existing funds have been in your account for a while. Sourcing and seasoning prevent money laundering and fraud, assuring your lender that you are not using your loan for a down payment. Lenders also use bank statements to see whether you have sufficient money to cover closing costs which range between two to five percent of the total cost of the loan.
The following are key factors that qualify you for a bank statement mortgage:
1. Steady income
Lenders need to know that you have a sufficient influx of money to ensure you make your mortgage payments on time. They look for regular sources of income that could include royalties, paychecks, and certain court-ordered payments such as alimony. If your income has drastically changed over the past two months, your lender would want to know why.
2. Regular savings account balance
Lenders need to ascertain whether you will be able to make your payments in the face of setbacks such as an unexpected medical bill or a layoff. They need to know that you have enough funds in your savings account to cover your mortgage. While each lender has an individual standard of how much you should have in your savings, most want to see a minimum of a few month’s worth of payments in your account.
3. No sudden large deposits of money
A large deposit of cash in your account is considered to be a major red flag as it might signal that you have taken a loan for your down payment that doesn’t show on your credit report. Using a loan for a down payment suggests that you a risky borrower, defeating the purpose of the payment, which is to show that you are a responsible buyer who saved up money from your steady income to cover costs.
There could be acceptable reasons for a sudden increase such as a new job, a sign-on bonus, or a monetary gift from a family member. Proper documentation that shows where the money came from is required in such cases.
Blakemortgage.com is a residential and commercial mortgage firm based in Scottsdale, AZ, serving the Phoenix Metropolitan market since 2002 offering comprehensive and customized mortgage solutions to clients. Their detailed, personalized, and client-focused approach makes them one of the best bank statement mortgage lenders.
