Well, it wasn’t until I started working in the financial industry and bought my second home, that I understood some of the reasons behind these requests from the mortgage banker.
Verification of Assets When Applying for a Loan
First, let’s talk about why you need to provide up to 30-day history. The bottom line is that lenders need to verify that all assets included in the loan application belong to the person(s) applying for the mortgage loan. The best way to do that is by looking at, at least, a month’s worth of statements.
A few things to keep in mind
- If there are any additional deposits made to your account, in addition to your regular income, be prepared to document where these funds came from. If, for example, these funds came from a separate savings account, then you’ll have to present a 30-day history of that account, as well.
- Lenders have to verify all the assets that will be used for your home purchase. They will be looking into your cash flow and make sure you have the funds needed to close on your loan and to make the monthly payments. They also need to verify that the information provided on the loan application matches these statements.
- If you’re thinking about using unsecured funds (i.e. a cash advance on a credit card) – don’t! These types of funds can’t be used to buy a house. Besides, you wouldn’t want to pay incredibly high interest rates on this cash advance, would you? You would be basically paying interest on interest.
- If your parents/aunt/uncle/cousin/grandma were thinking about helping you pay for your new home, keep in mind that, depending on the type of mortgage loan you’re getting, the person giving you this awesome gift may have to provide bank statements of the account(s) the money is coming from.
- If you apply and take out another loan while in the process of getting your home loan, then your mortgage banker will have to take that new loan into account and recalculate how much you qualify for. In other words, avoid getting new loans or credit cards while you’re in process of getting a mortgage.
So there you have several reasons why your mortgage banker asks you for all these documents. And you even got some additional tips on what to expect as you’re going through the asset verification process. Even though gathering all these statements is sometimes painful, it is so worth it because, at the end, a home will be all yours to enjoy!
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