Do mortgage lenders check your bank account?
Borrowers looking for a mortgage to buy or refinance their home need to be lender approved to get the loan. Lenders issue loans based on many criteria that include credit score, assets, income, and more. The mortgage lender will verify the facts that you provide. Additionally, the lender may contact your bank and verify your account and statements. Most complete verification of deposits request forms and get them to your bank. The purpose of the verification of deposits is for confirmation of your account. Money at a bank is a key factor for a successful mortgage. Many banks have downloadable forms on their website for lenders to use.
One may wonder what types of information are verified. During times when credit is tight, a lender may want evidence of money deposited and from where these deposits came. Other information obtained can include whether the account is current or closed, when this happened, and the type of account verified. Types of accounts include savings accounts, checking accounts, or money market accounts. The lender may also be looking for an average balance during a certain period – typically a two or three-month period – and the balance upon closing the account. Typically, banks overlook rare overdrafts, but a customer with many overdrafts within the two to three month period prior to closing will probably be viewed as risky.
A bottom line and simple explanation are that the lender wants to be sure that you have enough reserve money to cover several payments (the first few). Naturally, they want to make sure the funds in your account are yours and have been there for some time. Unacceptable sources of funds and other things can be found through a thorough analysis of your bank statements. Some of these unacceptable things include NSF occurrences. If you cannot verify the funds, these funds will not be used in the decision-making process.