Having your bank account statements in order and avoiding the deposit traps will help assure a smooth mortgage application and approval process. Follow these simple steps and remember, if you have a question, just ask me!!
- Document the source and purpose of deposits not clearly identifiable as being from your employer. If a deposit does not match up with your pay-stub, we will need to show where it came from.
- Make copies of all checks and deposit slips and keep them together in case they’re requested.
- Track transfers, too. We’ll need statements for both accounts involved. If it is a gift from a family member, please consult with us for the proper process to follow.
- Don’t deposit currency and checks together, as this will be hard to document. It’s best not to make cash deposits unless you can clearly document the source of the funds.
Following these steps will make it easy to prove that funds going into your account are not borrowed. Even private loans have corresponding payments, so underwriters have to be certain to account for all debts.
The Dreaded Blank Page of the Bank Statement
You may be tempted to throw away a numbered page on your statement if it is blank or contains an advertisement. Unfortunately, if the other pages are marked 5 of 8, 6 of 8, etc., the underwriter can’t be sure a missing page 8 of 8 had no important information.
To be sure there’s no delay in processing your loan application, please save and provide ALL numbered pages of your bank and other asset statements, even if they’re blank.
Your Down Payment and Reserves must be in an account
Mattress Money or any “cash on hand” is not acceptable. All funds must be “seasoned,” which means your money needs to be in an institutional account (bank, credit union, brokerage, etc.). You will need to provide all pages of up to three months of consecutive statements for proof these funds are yours.
Gift Funds are OK with a signed “gift letter” (a form we provide) and evidence of the donor’s ability (a statement showing sufficient funds). Later, we’ll need copies of the check, deposit slip and account statement to show the transfer into your account.
Assets Being Sold, such as a car, boat, collectible or anything of value you are selling, require proof of ownership (such as a registration or title) and evidence of value (blue book value or appraisal). After the sale, provide copies of the receipt and the check and deposit slip showing the transfer of funds to your account.
Other Examples include loans from employers or against retirement savings, grants, inheritances, proceeds of sale from other property, loan paybacks and winnings. Be prepared to show the source of funds, evidence of transfer into your account and any supporting documentation of value, terms, service provided, etc.
TIP: If you have time and want to minimize paperwork, consolidate all funds into one account at least two or three months prior to closing. Save any and all evidence of transfers and deposits and keep activity to a minimum.
Never hesitate to ask questions when you’re unsure about what will work and what will not. Mortgage Guidelines are updated and changing constantly.