How Your Banking Habits Can Affect Your Loan Approval
My goal is to educate and inform, I want to help alleviate any stress and complications in
your loan process, by helping you to be aware of requirements that are universally requested by lenders. I feel it is much better to be prepared up front so you can plan ahead for any possible situation that may arise during your loan process.
Banking is continually the number one loan condition we deal with. Banking habits are very personal and everyone banks differently. When applying for a mortgage, your banking habits become part of the approval process. Your bank statements get reviewed first by your lender, then on to the processor and finally the underwriter.
They are NOT looking for how many times you went to TacoBell® or what you spent shopping. What they ARE looking for is large deposits, un-sourced deposits or even undisclosed debt payments (ex. a new loan not showing on your credit report yet). Un-sourced meaning cash deposits and/or ATM/check deposits listed as “deposits” (versus ACH “AT&T Payroll) on your bank activity.
Why?
Well, when applying for a mortgage at any company, underwriting will ask you to provide bank statements showing where your down payment money and/or closing costs are being held (seasoning), which confirms the funds are yours to use (sourcing). Lending laws require proof that you are NOT receiving or borrowing money from any of the interested parties involved (i.e. Realtors, Lender, Visa, etc.).
Now knowing this, to help make it simple, I recommend that you ask yourself one question before you get in the car to look at a home….”Is my money in one account for loan application?” If you are like 90% of us and have various accounts in which you transfer funds back and forth, this should stop before you go out looking for a house.
I highly recommend starting to deposit in only one account and AVOID CASH DEPOSITS! Cash deposits are nearly impossible to source that this was your money, and are commonly not credited by underwriters as available funds for closing. If you have to deposit a check, make a copy of the check & deposit form. Otherwise just make sure all funds that are needed are in one account 2 months prior to going to underwriting. Trust me on this, you will be glad you did!
I hope this helps you and your able to use this and share this with others. As always if you have any questions please contact us, we are always happy to help.
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Cheers~
Ray Williams
