Bank Statements?

[Anonymous]

I've overdrawn my account a few times paying off collections and such. How much do they look into bank statements when getting appying for a loan?

[boomhower]

Overdrafts on a bank statement is going to look really really bad.  They typically look at the last three months.  I would wait until the overdrafts are outside of the range.

[Anonymous]

Would they take into consideration that I was paying my collections and cleaning up my credit?

[mamahearts]

Have you turned in your bank statements yet? If not, ask if the loan officer will take a VOD (verification of deposits).  If they do not then you will need to Letters of explanation but that may not be enough.  When I was shopping for my loan all three banks I applied at did accept VOD.   We used the VOD and we had no problems! Good luck!

[Anonymous]

I havent started the process yet. I'm doing my research and getting my credit up before taking the leap. What is a Verification of Deposit?

[mamahearts]

Ok good.  Some banks will accept a verification of deposits in lieu of bank statements.  This is so they can verify the source of the funds you're using for your down payment/closing costs.  With this they will see how long you have had the account, see the amount of your deposits and where they came from to be sure they are acceptable deposits.   As you're shopping, call around and ask the loan officer or email them asking if they will accept a VOD in lieu of bank statements.  It was one of the last steps before we closed and I was nervous, but we didn't have any problems.

[Anonymous]

Nice! Thank you so much. That's the only thing I was worried about. I've been working really hard fixing my credit and paying collections that I've overdrawn a few times. I feel like its a win/lose situation. Pay my credit and have bad bank statements, or have good bank statements and bad credit. I know credit outweighs my bank statements, since they only ask for the last 3 months, and when I'm done paying my credit, my statements will be back to normal.

[cdtotten]

I tend to agree if you have not turned over your bank statement, I would not.

Showing your underwriter that you have overdrawn your account recently is not smart at all, and could damage your chance of getting approved. Overdrawing to pay off collections is not a good thing, even if it is good intentions. If you are living that tight, then you probably will struggle owning a home.

Let the overdrafts age off your bank statements you need to provide and work on getting a solid down payment.

[StartingOver10]

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@cdtotten wrote:

I tend to agree if you have not turned over your bank statement, I would not.

Showing your underwriter that you have overdrawn your account recently is not smart at all, and could damage your chance of getting approved. Overdrawing to pay off collections is not a good thing, even if it is good intentions. If you are living that tight, then you probably will struggle owning a home.

Let the overdrafts age off your bank statements you need to provide and work on getting a solid down payment.

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+1

Get on solid footing before you start looking for a home. Are you planning to get an FHA mortgage? If so, it is likely the underwriter may ask for bank statements anyway - each lender can make the underwriting a little more tough than what FHA actually requires to insure the loan. The FHA standards are minimum standards.

Don't buy or try to buy while you are in a bind with your cash. There are other expenses both in the buying process (inspections, appraisals etc) and after you own your new home. If you don't have some reserves (I don't mean bank required reserves) its going to make it hard for you. Use this time to increase your score and bolster your savings. Good luck!

[YHWHUDAH]

For what its worth, I just closed on my mortgage and I had about 4 overdrafts on my statements and they never questioned it. I bank with my lender, and I had well over 20K in reserves; so I don't know if that played any part no questions..