When you start shopping for a car, you might be more concerned with additional features and specialty paint jobs than you are about the monthly bill. Unfortunately, the wrong financing can cost you dearly. Compound interest never sleeps, which means that you might be paying much more than you should if you work with the wrong lender. I want to help you to make great financial decisions, which is why I created this website. However, if you can remember a few tricks and keep those payments to a minimum, you can drive away with the car of your dreams without breaking the bank.
Most people purchasing a home don't spend much time thinking about what their bank statement looks like. But mortgage brokers are required to do a little extra due diligence to make sure that you're a good credit risk. This involves looking for a few things on your bank statements.
What are They Looking For?
Routinely, a mortgage broker will ask for two months' worth of bank statements along with your other paperwork. Why do they need this? They are looking for evidence of a few things that could affect your credit.
First, they need to verify that you do indeed have in the bank what you said you do. They will confirm that you have the down payment amount and enough to cover closing costs. They also want to see that you receive those regular paychecks or support checks that you listed as income.
Secondly, they want to make sure that the money has not recently been put into your bank from an unknown source. This is referred to as your money being "sourced and seasoned."
For example, if you took out a separate loan and deposited $50,000 in the bank last week, then the number of your debts are higher today than you listed on your mortgage application. Recent large deposits can skew how your assets look.
How Should You Prepare?
Before you hand over those bank statements, take a look at them with a fresh eye. Make sure that all deposits over a few hundred dollars are easily identifiable. If anyone has paid you back for a big vacation or your child is making payments on a car you gave them, make notes about these discrepancies. Get a note from the payer as to what they gave you and why.
Also, make sure your bank account shows the sum you specified for a down payment or other assets. Look out for unusual expenditures, such as lump payments for college expenses or a new furniture set, that might skew your numbers. And be sure that your income sources (such as payroll checks, alimony payments, or customer deposits) appear on the statement to show your regular income.
If your bank statement doesn't show what you want the mortgage broker to see or has unusual activity for which you cannot provide good documentation, wait until the next statement cycle before you turn over the documents.
Preparing your bank statement for the mortgage broker is an important part of getting ready to meet with them. And by spending a little time to tidy up your records, you'll experience a faster and smoother mortgage process.
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