When you start the process of applying for a mortgage, be ready to share intimate financial details with your mortgage adviser or broker. The lenders who look at your loan application must consider whether or not to lend you hundreds of thousands of dollars. As a part of that process, they want to be sure that you'll pay them back. With this in mind, it's completely reasonable for your mortgage adviser to ask for your bank account details -- and just about everything else.
Verify Funds to Close
If your loan requires you to bring money to closing for a down payment or closing fees, the lender will want to know that you have the money. While you might not have to include a bank statement showing every dollar that you'll use to close the loan, you will need it as the closing date comes near. Before drawing up loan documents and wiring money, most lenders want to know that you'll be able to do your part.
Verify Application Data
When you apply for your loan, you'll list all of your assets and liabilities. Lenders take all of these factors into account when deciding whether or not to lend to you. However, most won't count money that you borrowed from a family member to bulk up your bank account. To this end, you'll usually have to show at least a 30-day history to establish that you actually have the assets that you claim you have. If you receive money as a gift, as opposed to a loan, from a family member, you may need to establish the validity of the gift with a letter.
Find Unreported Debts
Lenders also want to look at your bank statements to see what you might not be telling them. For instance, if you have a problem with bouncing checks, it might not show up on your credit report, but it'll be immediately visible on your bank statement. Bank statements can also show special loan arrangements that you have with your bank that also aren't on your credit report. Your mortgage adviser is trying to assuage the lender's worries about your total debt and your ability to manage your money.
Beyond Bank Statements
Your bank statements are a small part of the total load of documentation that your mortgage adviser will request. First, most lenders won't want to see just your main checking account statement -- they'll investigate every statement for every account. Next, your lender will want to see information on your debts as well as verification of your income, with both current pay stubs and W-2s for historical data. Finally, you may also need to submit past tax returns and a signed 4506-T that lets the lender contact the Internal Revenue Service to order a copy of the tax return that you filed with it -- just in case you gave the bank a fake return.
- Quicken Loans: Why You Need to Provide Bank Statements When Buying a Home
- Quicken Loans: The Lyon’s Den: Advice on How to Prevent Common Mortgage Problems
- The Mortgage Experts: Why Do Lenders Want My Bank Statements?
- Bankrate: Documents You Need to Get a Home Mortgage
- The Mortgage Reports: Down Payment Assistance : How to Give and Receive a Cash Down Payment Gift for a Home
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.