overdrafts from savings

[StartingOver10]

OP, you asked what it "looks like to the underwriter":   honestly, it looks like you don't know how to manage your financial accounts.

Remember, when the LO collects your information he is putting together a package for the underwriter to show you can not only afford the puchase, but that you are willing to pay it and have a history of on time payments without issue. And in the package, if you had a one time issue that can be explained (LOE's). If you have a history of issues, its not so easy to explain to an underwriter.

If you have a history of OD's, NSF's and other negative bank account information, even if you have plenty of money, it means you can't manage your money. It looks like if anything were to happen at all during the loan period, you would not be able to make your payment either due to lack of money or lack of organization to "remember" to pay.

The good news is this: all you have to do is organize your accounts now. Set up a bank register and be diligent about putting in your debits and credits. Keep a separate written record. You won't OD anymore and if you have several months (at least 3 clear statements) then you can get on the road to buying a house. If you are self-employed you will want to have a much longer period of clear statements available (1 year).  The underwriter typically only asks for 2 or 3 months, but if they see that you have difficulty then they are going to ask for a longer period to see if the difficulty is an event or a pattern. A pattern of NSF's or OD's is a deal killer.

[FrugalRican]

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@StartingOver10 wrote:

OP, you asked what it "looks like to the underwriter":   honestly, it looks like you don't know how to manage your financial accounts.

Remember, when the LO collects your information he is putting together a package for the underwriter to show you can not only afford the puchase, but that you are willing to pay it and have a history of on time payments without issue. And in the package, if you had a one time issue that can be explained (LOE's). If you have a history of issues, its not so easy to explain to an underwriter.

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I'd have to echo this sentiment, specially since some banks code that transaction as an "Overdraft Protection Transfer".

There are some technicalities to this, but it could look just the same depending on what the lender is. It doesn't matter that it's a Savings to Checking, unless it's just seen as a straight-up Transfer.

OP, are you getting charged for doing this? A lot of banks will do this, but at a fee for doing so.

Typically about $5 per transaction.

[llecs]

OP posted that 3 yrs ago.

[FrugalRican]

Thread necroing is spreading like wildfire!!!

D'oh! Should have read the date.

[techgirl]

There are many good old threads that should be posted so that we can continue to learn from them without asking the same questions. Well, I wrote the motherload of all  letters regarding  overdrafts from a credit card overdraft account. Never thought that was a problem -  guess again! I think we nailed the letter - I'm so frickin' nervous!!!!

[hankejp]

Do the Underwriting and NSF's apply to all loans?  VA, USDA, Conventional, etc?  I never knew of this, which isn't good for me I guess.

[techgirl]

After everything I have been through, I would never overdraft again. Before buying a home have  at least two to three months of no overdrafts. I think they are scrutinizing us more due to our history...? But to be safe - it isn't a good idea to get used to an overdraft credit card. Make sure you have a good savings at least $2,000 or so or more depending... We saved $7,500 by the time the house was  done being built and paid off a credit card  we used as a down payment. That is another lesson - never, ever use a credit card to put down on a lot that could be considered a down... We had to pay it off fast. Call all TU, EQ and EX and get rid of all consumer comments (they could work  against you).

[LondonMassey]

I won't sign up for OP for the simple fact that I know if I had it, I would use it... Often.

I'm too cheap to overdraft, so I monitor my account every other day, and right before a big purchase, I use my banking app to check my balance or transfer if needed.

[techgirl]

With an over draft  account, they set up up with a Visa that is tied to your Checking and Savings. Let's say you couldn't or didn't move money over from your savings to checking in time - inestead of getting his with overdraft fees, they say, no problem, we will just pull from your Visa Overdraft account and you won't be charged any fees. Payback your Visa anytime you want. Doesn't that sound that it really isn't an overdraft?? Right?? Well, UW don't like it even if you aren't getting fees. I thought it was cool idea and it made it so I didn't have to constantly check my account. I thought it was like "insurance" and wouldn't count as an overdraft. Well, think again....