Mortgage companies verify bank statements to assess loan risk and repayment possibilities. If you wish to be considered for the loan, you must submit bank statements for each account for at least the last two months. It’s common for this step in the bank statement verification process to make you feel as though you’re being watched closely.
You can prepare sufficient documentation for an account check prior to a mortgage by being aware of what lenders look for and what constitutes a red flag. Additionally, you will discover advice on the savings needed to obtain a mortgage and move forward with purchasing the house of your dreams.
Indeed, during the mortgage application process, a mortgage lender may obtain information about your bank account. This is done to confirm your savings, assets, and income—all of which are crucial elements in figuring out whether you qualify for a mortgage.
How Mortgage Lenders Access Your Bank Accounts
There are two main ways that mortgage lenders can access your bank account information:
- Proof of Deposit (POD): This is a document that your bank provides to the lender, confirming the balance of your account and the source of any recent deposits.
- Verification of Deposit (VOD): This is a process where the lender contacts your bank directly to verify the information on your bank statements.
In most cases, the lender will require you to provide both a POD and a VOD. This helps them to ensure that the information on your bank statements is accurate and up-to-date.
What Mortgage Lenders Look for on Bank Statements
Mortgage lenders will look at a variety of factors on your bank statements including:
- Account balances: The lender will want to see that you have enough money in your accounts to cover the down payment and closing costs on your new home.
- Income: The lender will want to verify your income to make sure that you can afford the monthly mortgage payments.
- Savings history: The lender will want to see that you have a history of saving money, which shows that you are responsible with your finances.
- Debt: The lender will want to see how much debt you have, including credit card debt, student loans, and other loans.
- Large deposits: The lender will want to know the source of any large deposits in your account, especially if they are recent.
How to Prepare for Bank Statement Verification
There are a few things you can do to prepare for bank statement verification:
- Gather your bank statements: Make sure you have at least two months of bank statements for all of your accounts.
- Review your statements: Look for any errors or discrepancies and contact your bank if you find any.
- Explain any large deposits: If you have any large deposits in your account, be prepared to explain where the money came from.
- Be honest and upfront: The best way to avoid any problems is to be honest and upfront with your lender about your financial situation.
Frequently Asked Questions
Can a mortgage lender see my entire bank account history?
No, a mortgage lender will only be able to see the bank statements that you provide to them. They will not be able to see your entire bank account history.
What happens if my bank statements don’t meet the lender’s requirements?
If the bank doesn’t accept your bank statements as proof of funds, you might be able to support your application with other paperwork. For instance, you could submit a letter from your employer attesting to your income or a letter of gift from a donor providing funds for the down payment.
Can I get a mortgage if I have bad credit?
Yes, it is possible to get a mortgage even if you have bad credit. However, you may have to pay a higher interest rate or make a larger down payment.
Additional Resources
- Rocket Money: What Mortgage Lenders Look for on Bank Statements
- Investopedia: How Do Mortgage Lenders Check and Verify Bank Statements?
Mortgage lenders can access your bank account information during the mortgage application process. This is done to verify your income, assets, and savings, which are all important factors in determining your eligibility for a mortgage. By understanding what mortgage lenders look for on bank statements and how to prepare for bank statement verification, you can increase your chances of getting approved for a mortgage.
Why would you need a bank statement verified?
Mortgages are enormous financial commitments that involve taking on significant debt. You risk losing your home if you default. Lenders stand to lose money if you can’t make your monthly payments. Do lenders check bank statements before closing? Yes! Verifying your bank statements is one way they ensure you can repay what you borrow.
Do lenders check bank statements before closing?
Yes. Lenders verify bank statements in several ways and will sometimes contact the bank to verify validity. Some will only verify your paper documents, while others accept electronic documentation. A few import income and asset information digitally, eliminating your role as the middleman.
As a part of the process, lenders usually look at income, assets, savings, and a borrower’s creditworthiness. You may also be asked to provide proof of deposit.