Profile picture for marigold18

Bank statements when buying a home

My husband and I are planning on starting the process to apply for a mortgage in the next few months.  When submitting our bank statements do they look at what we are spending money on?  For example, running to the store here and there, stopping to get a gallon of milk, spending a dollar on a coffee?  Just wondering if they look at spending habits.

Thank you.
  • March 29 2011 - Mariner's Harbor
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Answers (9)

There is a specific fomula that a lender uses for loan approval. Each one is slightly different.

The bank statement confirms your credits and debits.  The lender typically wants to see that your monthly mortgage payment will be no more than 30% of your total budget (illustrated by your bank statement)
  • February 27 2013
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Profile picture for HSaltersJ
As for NSF charges, what exactly do they look at? I had one because I have a roommate but all the bills are in my name and so it overdrafted but that was it. Would that be reason enough for a turndown?
  • February 25 2013
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As a lender, we do not look at items such as that, but there are items that can be seen that could bring up questions such as an undisclosed mortgage payment or similar.  Generally an underwriter is looking for the allowable balance, are there NSF charges, loans on the statement that are not showing on the credit report, general deposits (that are not transfers or direct deposit payroll) which could be a loan, gifted funds that need documenting, mattress money, etc.  If there is a general deposit on your statement, go ahead and get proof of the source of that deposit.  If you sold something, show the bill of sale, proof of receipt of funds, copy of the deposit slip.  If it is from a side job, document that or at least write a detailed explanation letter if documentation is not available.  If it is your net pay that is not direct deposit, provide the paystub.  It is very common for clients to give us most pages of a bank statement and make sure if your statement says "1 of 7", we need all seven even if pages are blank because we don't know it is blank until we see it.  Think of yourself as an investigator b/c that is basically what we have to be when looking at a file. 

  • March 31 2011
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At the time of application, your lender will require the past 2 months bank statements, keep in mind that all non payroll deposits over 1k will have to be sourced and explained. Everyday relatively small expenses shouldn't be questioned. The only expenses that are normally concerns for underwriters are payments made to creditors that do not appear on your credit report. If the undisclosed debt belongs to you, then it will have to be factored in your debt to income ratio. If the debt is not yours and perhaps you paid a family members bill from your bank account, then you would have to explain and document it.
  • March 30 2011
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Allow me to be an echo to what has already been said here so far but small purchases (coffee, groceries, night out) arent a concern of theirs.  It, of course, appeares on the statements you provide to them but they are looking for larger numbers.  As one agent said, did you just make a $20K deposit and if so, where did it come from?  Is that a personal loan you'll need to repay which will effect your asset/liability ratio.  And the opposite is true.  Are you making large payments or transactions on the regular that will effect your ability to pay monthly statement. 

Your coffee and grocery purchases arent important.  Though bringing them a Starbucks coffee next time you see them may sweeten them up a bit.  Happy hunting.
  • March 29 2011
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Profile picture for Mills Realty
They are looking for larger amounts and inconsistencies.  Going to the store multiple times a day will not effect you.  You might want to try and make a list!  :-)
  • March 29 2011
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Profile picture for marigold18
So I dont need to worry about if I had to run to the store 5 times that day and it's listed on my statement?  What is considered a small purchase?
  • March 29 2011
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Profile picture for wetdawgs
They are looking to see that you have the money you claim to have, and haven't had major unexplained income or outflow.     They don't care about your coffee purchase habits.

For example, if you claimed to have income of $5,000/month, but suddenly had a deposit of $20,000 - they'd want to know what was up.
  • March 29 2011
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It's just not a good thing to make any big purchases just before you are trying to buy.  Small purchases are not considered.  Don't worry about that although assets such as how much money is in your checking account is important.
  • March 29 2011
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