Archive for August 2015

Are You Aware Of This Common Mortgage Mistake?

Your financial statement is probably the greatest source of information for your lender in the event that you are looking to get a mortgage approved. Well, it is the main source of information regarding your financial position. This explains why the lender is very interested in the information presented within your financial statement. Most people assume that the lender only wants to know how much money you have and how regularly you deposit money into your account. The truth is that the lender is interested in the fine details like where the money is from and whether the source is legitimate. This means that you must be able to justify all the monies in your account.

The common mistake

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After establishing that you need a certain amount of money in your account in order to apply for a mortgage, you may be tempted to borrow money or acquire it from other sources like family, friends or another job that is not a part of your main source of income. This is not entirely a bad thing. It is however considered a mistake because the lender will need you to verify the source of the income depending on how much it is. There often is a cause for concern when the money in question is more than 25% of your regular income.

You need to not only explain where the money is from but also provide supporting documentation that will assure the lenders of the source of that money. The main idea here is to be able to explain your financial situation to the finest of details, in order to avoid surprises. The lender would not want you borrowing money to impress them, since they need to fully understand your financial situation before they can pay for your house.

Expected outcomes

If you happen to have some deposits in your account that cannot be explained or documented effectively, your whole application will be credibly delayed. Here, you would like to remember that delays do not favor you in any way seeing as you will be incurring extra costs while also letting lucrative house deals pass you by. You need to ensure that you have all the documentation to explain the money that has been gifted to you, money that you have earned from a side hustle and any other deposit made to your account that can be seen as irregular based on your existing banking patterns.

Sometimes you may have everything in order with your mortgage application except for a few deposits in your account. Even with an impressive credit rating and a stellar pre-qualification, you will not be approved for the mortgage unless you clear up the suspicious deposits. Be sure to have a transparent financial statement with the required explanation and documentation in case you have deposits that can be considered as out of your regular banking pattern. This is the only way to avoid the unnecessary costs that come with the delays in processing a mortgage when your account has irregular deposits. Feel free to speak to us if you have any questions regarding mortgages.