Why Do Mortgage Lenders Ask For Bank Statements?July 2nd, 2022 by Administrator
In today’s era, applying for a mortgage is nothing less than putting yourself under a microscope. Even those who come from a well-to-do family may feel uneasy about the scrutiny the mortgage does.
The bright side is that this process safeguards you too. Your mortgage lender wants to ensure that you aren’t on the verge of defaulting on a loan, which would be problematic for every single being who is involved– the lender will lose his money, and you- your home.
To steer clear of this scenario, mortgage applicants are usually asked to present the documents that guarantee that they have the sufficient amount to buy a home. This includes tax returns, gift letters, pay stubs, and of course, your bank statements. A bank statement says a lot about your financial stability.
What is a Bank Statement?
A bank statement is a kind of document that displays your financial transactions and banking-related activities. It can help you track your finances, locate mistakes, keep a check on suspicious activities, and know your spending habits. These statements are typically issued on a monthly or quarterly basis.
Why do Mortgage Lenders require your Bank Statements?
Mortgage lenders need your recent bank statements to check your available funds. Also, they will likely ask you to show all the documents that hold monetary assets. Why? This is because they want to get make sure whether you will be able to afford your down payment and monthly mortgage payments.
Every mortgage lender and the investors purchasing mortgages from the secondary market have their own needs regarding how many months’ worth of mortgage payments they except borrowers to have squirreled up, excluding the amount you will use to make the down payments. Therefore, it is essential to keep this thing in mind when getting ready to kick start the residential property buying process.
There are some real estate agents who can help you find the right mortgage lender. So, seeking the help of a real estate agent will be beneficial.
Some Important Things to Keep in Mind
The collection of the documentation process for a loan can be extremely daunting if you don’t know what to expect. Mentioned are a couple of more things you better know when collecting important documents for your mortgage lender.
- If you have a family member or a friend who is willing to help you pay for your new home, bear in mind that whoever is gifting you need to provide documentation of the transfer of funds. For example, a bank statement, withdrawal, or deposit slips a letter confirming that the gifts don’t need to be repaid.
- While in the process of getting a home loan, if you apply and take out another loan, the mortgage loan provider will have to consider that newly applied loan so that he can recalculate how much you qualify for. In a crisp and clear word, try avoiding new loans or credits while in the process of getting a mortgage.
- When applying for a mortgage loan, make sure the process goes as smoothly as possible; hence carry on the needed documents with you.
- There are chances that your mortgage lender may do a check on your bank account not once but many times. This also means that you mustn’t make any drastic changes to your finances once your loan has been approved.
The Bottom Line
For the buying process, having a complete understanding of where a borrower’s finances stand when applying for a mortgage loan is very essential. There are great chances of getting a home loan if your credit score is good and your mortgage lender has analyzed that you can be trusted. In case you face any difficulty in finding a mortgage lender, seek the help of a real estate agent.