What do mortgage lenders review on bank statements

It's a funny feeling when you are asked to turn over your bank statements to a lender.

When you are asked to turn over this seemingly private document, there can be a sense of reluctancy. Will they judge me for what I have in my account? How do I stack up to the others they review every day? Why do they even need this anyways?

While this can be a sensitive thing to do, it is quite necessary for the lender to review. It is their job to ensure that you are a fit for a loan from their bank and that you show no signs of financial mismanagement. More specifically, this is what they look for in your bank statements:

  1. Big Deposits: While money is money, banks get a little weary when they see large deposits. They are forced to wonder if the sum was obtained legally or if it came from a qualified source. That being said, so long as you have a very specific explanation of where the funds were obtained from, then you should be just fine.

  2. Non-Disclosed Credit Accounts: Lenders will look for reoccurring payments to individuals that are not tracked by an institution. For example, if your parents loaned you money for your car and you are paying them every month (versus an institution), then the bank could raise a red flag because it is considered a non-disclosed credit account that wouldn't have been shown when they ran your credit earlier in the process.

  3. Overdraft Charges: If the bank sees that you continuously have overdraft charges, that's a pretty good sign that you won't be a good borrower with them. Having no overdraft charges shows the bank that you will be a responsible borrower and are likely to make your payments in full and on time.

The thought of handing over your bank statements to a random person may not sit well with you. Trust me, I get it. However, this is a necessary part of the process, and I hope it may be easier for you now that you know why they are needed.

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