Lenders and those with a mortgage broker license will require a range of documents and information to determine whether someone is eligible for a loan and this document portfolio includes a few bank statements. Here at Mortgage Masters, we know all the ins and outs of getting a loan and we are always happy to help each and every one of our clients. That is why we have provided an explanatory guide that lets you know what a lender looks for in your bank statements and how they use this information to determine your suitability for a home loan or commercial property loan. We are proud to be the best mortgage broker for 2022 in Auckland, and we take pride in our level of expertise and professionalism when it comes to helping our clients’ dreams come true, one home loan basic at a time.
How Many Bank Statements Will You Need?
You will need to provide at least 2 bank statements to your mortgage broker or money lender. Lenders ask for multiple bank statements because they want to be sure that you haven’t taken out a loan or borrowed money from someone to be able to qualify for your loan. Two statements are typically recommended because any loans you take out beyond a 2-month period will have already shown up on your credit report.
What do Lenders Look for When Assessing Your Home Loan Eligibility?
Your lender or appointed mortgage broker licensee needs to verify that you have enough money coming in regularly to make your monthly mortgage payments as well as enough money to cover the down payment. Your lender will also want to see that you have at least a few months’ worth of mortgage payments available. During this process, they will want to check all bank accounts, if you have multiple. They check your bank statements to be sure that your assets are ‘sourced and seasoned.’ ‘Sourced’ means that the lender knows where your money is coming from and ‘seasoned’ means that all of the funds have been in your account for a while. Both sourcing and seasoning help to prevent fraud and money laundering and helps to assure the lender that you aren’t using a loan for your down payment.
Finally, your lender uses your bank statements to see whether you have enough money in your account to cover any closing costs. Closing costs typically range between 2% to 5% of the total cost of your loan. Your mortgage company will look at your liquid cash to make sure you didn’t forget to set aside the money to finalise your loan.
What is the Underwriting Process?
The underwriter is the person who evaluates and approves your mortgage, and they will look for four key things on your bank statements:
- Enough cash saved up for the down payment and closing costs
- The source of your down payment, which must be acceptable under the lender’s guidelines
- Enough cash flow or savings to make monthly mortgage payments
- Reserves, which are extra funds available in case of an emergency