As part of the typical mortgage loan application process, you can bet that you’ll be asked to provide a few things for your lender. For example, the lender wants to verify how much money you make each month to determine an affordability range. The application has a section on it that asks you how much you make each month but the lender needs to do more than just take your word for it, frankly.
Income verification is performed by looking at your most recent paycheck stubs covering a 30 day period. To make sure you have a solid employment history, you might also be asked to provide the last two years of W2 forms. Or, if you’re self-employed, your last two years of personal and business tax returns. Your loan officer will provide you with a ‘needs list’ which identifies what you can expect to provide.
On the application you’ll also be asked the types of credit obligations you have such as a car payment, student loan or credit cards. You will enter this information, to the best of your knowledge at this point. Again however, the lender needs to verify your debts by running a credit report which shows how much you owe, to whom and what your minimum monthly payments are.
Of course, buying and financing a home means shelling out a few funds for a down payment and closing costs. And again, the lender will need to verify how much you have available. Yes, you’ll be asked how much you have in various accounts that belong to you but the third-party verification requirement remains. The statements will list a daily balance along with a balance listed at the end of the statement cycle. But there is some more information on bank statements lenders use other than just the balances.
Lenders like to match up your paycheck stubs with deposits in the same amount on regular dates. If you get paid on the 1st and 15th, the lender wants to see deposits on those dates that match your paycheck stub. The lender may also look for any other income that does not have any verified source. If, besides the 1st and 15th dates, another amount pops up on another date, the lender wants to know the source of those funds. If you can verify the source of those funds and you need to use those funds to close the transaction, your loan officer will guide you through this verification process.
Finally, for those that are self-employed, bank statements show business cash flow with regular deposits from standard commerce.