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Non payroll bank depsosits and monetary gifts should be carefully planned and not just show up in the middle of a bank statement cycle. These deposits require a letter of explanation (LOX) that
justifies their source. Any deposit that can’t be sourced will NOT count in the total of available funds to close. This concern can’t be understated.
Bank statements are used to review spending habits, saving habits, and that money being deposited which needs to come from a verified source. Bank statements help underwriters determine
that spending habits are not going to put you in further debt after the mortgage. Again, if you have deposits that cannot be verified from legitimate sources, you have a huge red flag. If you have a
side business and are making deposits related to this business then you should also have tax returns or something to prove it. Total income is important especially with downpayment assistance
programs.
Review what kind of story your bank statements tell. Do you have NSF’s? Do you pay any debts that might not show up on your credit report? Is your savings enough to pay the monthly mortgage
amount? Talk to your loan officer about these topics. Get out in front of these issues early.. don’t hide from them, they will always be discovered in underwriting.
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source
Home loan documentation - bank statements
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