When you’re trying to qualify for a mortgages loan to finance your new home, you might be asked for various financial information and documents, including your bank statement. But, why would a mortgage lender in Dallas ask you for your bank statement? Is it necessary to provide your bank statement to qualify for a loan?
Let us tell you why…
Why does a mortgage company ask for your bank statement?
In order to successfully get a loan, your mortgage lender will ask you for your bank statement. The prime reason for this is to learn more about your financial standings, your income, your spending habits, and how responsible you are with money. This is because no mortgage lender would like to lend a loan to an individual who does not have a strong financial standing or has outrageous spending habits.
Apart from this, you will also be judged on how well you handle finances properly. This way, mortgage lenders will be less at risk when they’re lending money, and will be more confident. So, it all comes down to the risk. The better you are with your finances, the less risks thereof lending you a mortgage loan.
And, with your bank statement, the mortgage lender will also be able to determine your ability to pay back the loan. Moreover, a mortgage lender will also state how much they are willing to lend you, based on your bank statement.
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This is why it is imperative to keep track of your spending habits. If you are considering getting a mortgage loan for your new home, it would be a good idea to start saving money.
Try to minimize unnecessary spending, unsubscribe from unnecessary subscriptions, as well as pay your monthly payments before the deadline, so that you have ample cash in your bank account, and that you are not considered a defaulter.
What are mortgage companies actually looking for in your bank statement?
So, what exactly will your mortgage lender be looking for in your bank statement?
As talked about earlier, your mortgage lender just needs to assess how well you manage your finances, and how you will be able to pay back the loan you are going to borrow.
In most cases, mortgage lenders will take a look at whether you are exceeding your limit on a regular basis.
If you are, the lender might feel at risk of lending you a loan. Plus, other aspects that will be looked at include any missed payments (if any), as this will show how well you are able to handle money and pay off your monthly payments. And, if you meet your deadlines well, the mortgage company will be more confident lending you a mortgage loan, that too somewhere near your desired amount.
Other aspects a mortgage lender might take a look at include the regularity of deposits, how many times your account is “overdrawn”, your debts, or any large unexplainable money deposits, which may indicate a large borrowed amount just so you can qualify for a loan.
Mortgage Closing Costs Explained
By definition, closing costs are the “expenses you pay” when you reach the final stages of your home buying process. Mortgage closing costs typically range from 3% to 6% of the total home price. This means if you have purchased a house worth $300,000, your closing costs could vary between $9000 to $18000.
But this is obviously just a rough estimate of how much mortgage closing costs you have to pay on average. The exact figure depends on the type of loan, your location, and the agreed-upon terms and conditions between you and those third-party service providers.
Some loan types cover the cost of mortgage insurance by default. For example, a conventional mortgage doesn’t need a buyer to pay separately for the mortgage insurance once they have paid a 20% downpayment on their loan. Hence, you can look for such loan options that do not ask you to pay extra for insurance.
We shared some of our tried and tested tips to help you avoid or reduce your mortgage costs. The good thing is almost all closing costs are negotiable. This means you can easily control or reduce them by using good negotiation skills.
We know this isn’t an option for most buyers. But if you can afford it. Paying cash for your home will save you a lot in terms of closing costs.
