Mortgage lenders spend their entire careers looking for financial mismanagement. They will carefully review your finances before deciding to approve or deny your home loan application. They are going to look to see if you have the necessary funds for a down payment and if you can afford closing costs. They will look at whether you are likely to be able to make your monthly mortgage payments.
To achieve these goals, they will look at your bank statements. This is why it’s essential to review your statements, know what they are looking for, and statement to make any necessary changes to get the approval and interest rate you want.
Lenders Do Not Like Seeing Overdraft Charges
It is common for a lender to ask for two months of bank statements when considering someone for a home loan. If they see that there are numerous overdraft charges, they will not take this as an indication that you are a reasonable risk. It does not matter what the circumstances were – if you have a long list of insufficient funds or overdrafts on your account, it will appear to a lender that you are not the best at managing your finances.
There Have Been Large Deposits Made Recently
If there are large deposits in lump sums, the lender may not be sure where the funds are coming from. In that case, they may assume that they are coming from some type of unacceptable source, such as an illegal source. If you do not have a simple explanation of the large deposit – and proof to back up your explanation – then a lender may choose to not count those funds and may not approve you for the loan.
You Have Non-Disclosed Credit Accounts
If you borrow money from a family member or friend and pay them back with monthly payments, you may not realize that this needs to be reported to your lender. Not doing so can raise red flags when they see on your bank statement that you have regularly recurring payments to an individual. If you are paying an individual back, this should be reported to your bank as a credit account – even though it does not show up on your credit report.
Once You Have Been Approved Choose the Right Real Estate Professional
After the bank has approved you, you can move on to the fun stuff: Looking at available properties to find the perfect choice for you. Doing this is easier when you have the right real estate professional work with you. To learn more, contact Berkshire Hathaway HomeServices at (310) 373-0021. We look forward to adding you to our extensive list of happy clients.