What do Mortgage Lenders look for on Bank Statements? |
Posted: November 19, 2020 |
Buying a home is a massive headache. Finding a balance between how much you can pay, and the best home is crucial. This makes financing very important as it a colossal mistake buy a home you cannot afford. Therefore, finding the best financiers is paramount. Bank statements are central to this procedure as they provide information about your financial status through necessary details such as:
> Assets > Business Documents > Proof of Income > Good Credit > Insurance This leads to the critical question, what do mortgage lenders look for on bank statements. The basic answer is the credit score. Most financial institutions scrutinize your credit history to determine your ability to handle debts. However, they also look keenly into other things on your bank statement like; Irregular Deposits: When lenders look through your bank statement, they look for some form of consistency in how you earn, spend, borrow, and payback. Therefore, when there are sudden considerable inconsistencies in the deposit, it raises questions. The immediate assumption is that the money does not belong to you, and it's a move to better your chances. Thus, if there are any irregular deposits in your accounts, provide the necessary documentation to explain the source. For example, if the money is a gift from a family member, you can provide a letter from them to back your claim. Additionally, it is advisable to let the money sit in the account for about three months before seeking a mortgage loan. This will contribute may also contribute to the recommended 20% down payment to ensure you earn reasonable interest rates. Inaccurate Expenditure: When you apply for a mortgage loan, you input your expenditure in the application. When lenders analyze your bank statement, they compare your application's spending to the one on your account. It is a massive disadvantage if an analysis of your accounts reveal that you spend more. Any irregularities are bound to reduce your borrowing ability. As it is hectic to keep track of all your spending, it is advisable to apply online tools and budgeting technology such as apps. There, you can record any amount you spend, which ensures your application is very accurate. Bank Overdrafts: Overdrafts happen when you spend beyond the amount in your account. When this happens, banks charge an overdraft fee. Thus, when lenders check your bank statement, they are keen to notice this fee. Mistakes are bound to occur, but regular overdrafts are an instant red flag. They indicate that you are somewhat unaware of how much you earn and borrow much more than you can pay. While you could discuss the overdrafts with the lenders, it is advisable to wait for some months before applying for a mortgage loan. This will give you time to work on your financial stability. Before you apply for that mortgage loan, have a grace period to consult with various financial professionals. You could also consult with mortgage loan provided like Blake Mortgage to get an idea of the requirements. This gives more time to comply; thus, a better standing when lenders scrutinize your statements. They are also well-positioned to answer the question, what do mortgage lenders look for on bank statements.
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