06/14/2024
*Free Tip Friday*
Did you know.....one of the most challenging and frustrating parts of qualifying for a mortgage can be verifying assets? Here are just a couple pitfalls I see on a regular basis that can leave borrowers befuddled:
- Statement Format - Two monthly statements or a quarterly statement are needed to verify any asset being used for qualifying. Sounds simple right? You would be surprised! The importance of getting an actual statement is crucial. What's that mean? Transaction summaries that don't include a customer name, bank name, or account number WON'T work. Screen shots are also unlikely to work. Oh and that blank page 8 of 8 at the end of your statement.....I need that too!
- Large Deposits - Any time a large deposit on the bank statements is identified it will need to be sourced. What's this mean? Basically a paper trail will need to be obtained including cancelled checks, statements from the institution the funds came from, and typically an explanation in writing explaining the movement of the funds. But why? In short, it's the law. The Patriot Act requires lenders to verify where large deposits come from to verify there is no money laundering taking place. So, what is a larger deposit? Typically, any deposit greater than 50% of the income on the loan application would be defined as a large deposit.
Simply being aware of these pitfalls and understanding there are no shortcuts while navigating these may help with the challenge. If there is a simpler option, odds are an experienced lender has already done what they can to avoid asking for additional documentation. Lastly, when you're thinking about buying a home consider if making a $9999 cash deposit into your bank account is the right choice :). I joke, but in all seriousness being mindful of money movement leading up to a home purchase can help mitigate frustrations later!
Happy Friday!
Farmers State Bank Farmers State Bank - West Des Moines
