Perhaps this is your first time purchasing a home or perhaps the last time you purchased a home was so long ago you dont even remember what to expect, regardless, The Investor Hub is here to help! Mortgage lenders are experts at sifting through finances, finding red flags that signify financial mismanagement or neglect. Buying a home is a huge purchase, a lenders job is to assess if your bank statements reflect your financial competency! Generally, lenders will only look between 2-3 months of your statements. So what are the red flags that they look out for?!
Large Inconsistent Deposits
When lenders see large inconsistent deposits it could be seen as the funds are coming from a less than legal source. If you know that your bank statements will reflect large deposits be sure that you are able to provide a reasonable explanation. If the explanation doesn’t seem rational the lender may disregard those funds and just analyze the remaining dollars to their review of whether you qualify for the loan you are applying for.
Surely, this is not a surprise! Having multiple overdrafts over the course of 2 to 3 months that the bank is assessing. No matter the reason or circumstance having a history of overdrafts and negative balances shows your lended that you struggle managing your funds. Be sure in the months leading up to seeking a mortgage loan you have everything tightened up.
Monthly deposits to another bank account rather than a trackable credit account could be seen as a non-disclosed credit account. This shows that your debt to income ratio may be even higher than you are disclosing, and will be taken into account as such if its determined to be so!
Overall, for a smooth process, its best to start organizing and preparing your financial activity! Keep in mind that underwriters will look at your accounts once more just before closing so be sure you maintain a good financial view throughout the whole process!