Bank statements are essential documents lenders require when processing a mortgage application. They offer insight into your financial position and help lenders determine whether you’re capable of making your monthly mortgage payments.
Bank statement loans are considered riskier than traditional mortgages because they lack backing from government-sponsored enterprises like Fannie Mae or Freddie Mac. Although they’re harder to acquire, bank statement loans may be ideal for self-employed individuals or business owners who want the flexibility of using their bank statements as collateral for a mortgage loan.
Bank statement mortgage loans are often preferred by homebuyers with limited cash reserves and low debt-to-income ratios. Since they don’t require a large down payment, they’re quicker to process than traditional mortgages since fewer documents are needed.
What amount is on my bank statements?
Your bank statements contain two sections – deposit and withdrawal – which reflect how much money has been deposited into your account. This includes any paychecks, cashed checks or wired funds as well as any gifts to cover down payments or closing costs.
Self-employed individuals may find their bank statements to have a more irregular pattern of income, making it harder for lenders to verify you have enough cash available to cover mortgage payments. To prevent this issue from arising, make any changes in income in writing or provide an accepted offer letter if you’ve started a new job.
Why Does My Lender Need My Bank Statements?
Mortgage lenders review your bank statements to guarantee you have enough income coming in and savings saved up for payment of your mortgage. They also want to know if there are several months worth of payments left over in case there are any major disruptions such as job loss. With these documents in hand, mortgage lenders can ensure you will remain solvent during any unexpected income losses.
Non-sufficient fund fees (NSFs) are another common issue that may appear on your bank statements. Lenders will take note of this and ask you for an explanation if these charges have previously appeared in your account.
Other issues that could cause a lender to question your eligibility for a mortgage include overdrafts on your bank account and large deposits that aren’t from payroll or other disclosed sources. These indicate you’re living above your means or having trouble meeting expenses.
How Can I Access My Bank Statements?
Most people access their banking information through the bank’s online portal. Alternatively, they can call customer service and speak with a representative for help. If there’s no online portal available, paper copies or PDFs can be printed off and sent directly to the lender.
When applying for a mortgage loan, the time it takes your lender to review your bank statements depends on its size and complexity. Bigger banks usually move more slowly than smaller or non-bank lenders do; typically this process takes two or three days but may take longer if dealing with an established institution.
