Bank Statements, do I?

YES, YOU MUST SHARE YOUR BANK STATEMENTS IF YOU WANT A HOME LOAN...

If you want a home mortgage loan, you'll be required to provide your 2 most recent bank statements. That means every page, with nothing blacked out.

It can be an exact photocopy of the statement you receive in the mail, or a complete print-out of your online statement. Either way, it must include your name, address, and account number, the date, and the bank's name, address, and URL.

If another person is listed on the account, you'll be required to provide a letter stating that you have 100% access to the funds.

You might feel this is intrusive.

More than one would-be home buyer has balked at the idea of sharing his or her bank statements with a lender. They feel that how they receive and spend their money is nobody's business.

That's true, but only partially true.

Banks have reasons for wanting to see your complete bank statements before approving your home mortgage loan.

First, they want to know where your money is coming from.

They want assurance that the funds you'll use for your down payment and closing costs are not borrowed, so they look for large lump-sum deposits.

They recognize that large deposits may come from cashing in a CD, from selling a note you were holding, or from selling an asset, such as a motor home. If that's the case, you'll be able to explain it and should be able to provide proof.

Some loan programs allow for gifts from relatives, but again, you'll need to provide proof.

Since 911, banks also want assurance that you are not part of a money-laundering scheme that assists terrorists. It sounds outlandish, but such things do happen. Before you become insulted, remember that aside from perhaps your local mortgage broker, the people who will grant that loan don't know you.  

As for your spending habits - they want to see that you are not making payments on a loan that you have not disclosed.

You might say it's not their business. However, part of the approval process is determining whether you have enough income to meet all of your obligations and have funds left over for incidentals like food, transportation, utility bills, etc.

Note that the bank only looks at 2 months' statements...

If you sold a car or other large asset 3 months ago and deposited the funds, you won't have to explain because they won't see that deposit.

So, if you've been saving cash for your down payment, deposit it at least 60 days before you plan to apply for a home mortgage loan. 90 days is even safer, since banks don't necessarily process their statements on the same day each month.

This may seem harsh, but these precautions are as much for you as for the bank. Becoming over-extended and not able to comfortably meet your obligations is not a pleasant way to live.




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SEE YOU AGAIN NEXT SUNDAY...