2 Reasons why Statements are Essential for Bank Statement Home Loans in Houston

The lack of W-2s is a serious problem when you are applying for a mortgage. This is a common issue faced by almost every self-employed person. However, this does not mean you have to run back to your cubicle. You can get qualified through your bank statements. The scarcity of documents is swiftly resolved once the lender takes a glance at the transactions you make. For this very reason, freelancers, gig workers, or businessmen can apply for the bank statement home loans.

But your mind may still wonder why bank statements are so important that the loan program is named after them. The private lender requires financial documents to evaluate whether the buyer is a good or bad risk for the mortgage. It is the job of the lender to find the red flags and ask for elaborate explanations. The bank statement home loans in Houston are no different. The underwriters can further find questionable funds or financial management while checking the statements. It is better to look at your statements before submitting the bank statement home loan application. Such an early initiative can save your dream and protect you from embarrassment. Let’s go over the following tips and examine your bank statements.

Any irregular transactions

Pay attention to the monthly payments which do not relate to the credit account mentioned in the bank statement mortgage application. Usually, the credit report is there for pulling information regarding student loans, debt accounts, auto loans, and credit cards. However, a handful of the creditors may not report to well-known credit bureaus.

In case you took a personal, business, or private loan from a person and not from a bank, the details are not going to be displayed in the credit report.

Large, doubtful deposits 

When the loan underwriter finds irregular bank deposits in the statement, they often question the source of down payment or closing costs. It is possible that the buyer has borrowed the fund on his/her credit card. However, this does not turn up on the credit report. An illegal gift is what the lender may call such a large deposit.

If the bank statements are very recent, the borrower assesses the large deposits. These are termed as a sole deposit exceeding a total or half of the monthly income for the mortgage. Similarly, the new large deposits without a considerable explanation pose threat to the applicant. When the buyer fails to prove the source of deposit, the lender is likely to decline the fund. Only verified funds are qualified for the mortgage. It is better to save a chunk of cash for the 10% down payment you need to pay with the bank statement home loan.

A bank statement loan is generally not difficult to qualify. Since bank statements play a crucial role, you need to pay additional attention to it. Of course, you need to maintain a deposit of $10,000 per month if it is a personal account. For further information, don’t shy away from asking your lender.