It is not uncommon for every mortgage loan applicant to be asked to provide at least one bank statement when trying to seek approval for a home purchase. Here are some frequently asked questions that loan applicants have about bank statements when it comes to a mortgage loan.
Why do mortgage lenders ask for bank statements?
Mortgage lenders use bank statements as a way to provide solid evidence and make sure that the applicant can afford both of the down payment closing costs and monthly mortgage payments of the loan they are about to hand out. Your bank statement is used to verify the amount you have saved and the source in which it comes from. Lenders are looking to make sure that the money in your account for the loan is money you have actually earned or is from an acceptable legal gifting source.
How many bank statements do I need to provide for a mortgage application?
The answer to this question actually depends upon the type of loan for which you are applying. In many cases, during the application process for a traditional conventional loan you will be asked to provide the most recent two months’ worth of bank statements. For a bank statement loan for the self-employed, this number will increase to 1 to 2 years’ worth of statements. The amount of asked for statements can also increase when a loan goes through the underwriting process. It is also not uncommon for additional statements to be asked for. If the underwriting process takes a certain amount of time, they will want most recent bank statements.
Am I required to disclose every bank account I have to a mortgage lender?
The only bank account that needs to be verified by a mortgage lender will be one that will be used for paying off the mortgage that you are applying. If a bank account has funds in it that you plan to use to help qualify for the mortgage then you will need to supply the bank statements for this account.
What is an underwriter looking for on my bank statements?
Most often underwriters are looking for set items to ensure that you are financially stable and responsible to pay back a mortgage loan. Often these items will include the amount of money to cover down payment and closing costs as well as a significant amount coming in regularly that can help you to cover your monthly payments as well as your other everyday living costs.
Does a mortgage lender look at savings accounts?
Yes, often times a mortgage lender will look into any accounts that are included within bank statement information, including all checking and savings accounts, as well as any open line of credit.
Why would a loan be denied in the underwriting process?
There are several countless reasons that underwriters decide to deny the approval of a loan. A couple of the most common include not having enough credit or credit history, or having a very high debt to income ratio. If an underwriter decides to deny approval after looking over bank statements it is most often because the sources of the funds in the account cannot be verified or are not deemed as legal and acceptable for loan purposes.
How long does it typically take an underwriter to make a decision on a mortgage application?
The actual underwriting process varies by each individual underwriter and by lender depending upon the specific requirements of the actual lender. Some underwriters can take as little as a couple of days or a week while others can take several months.
For more information on your mortgage options in Mission Viejo and surrounding areas please contact me any time, including bank statement mortgages and jumbo or super jumbo loans, please contact me anytime.
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