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I'm supposed to submit the last 2 months bank statements with my mortgage application. My new statement comes out in a few days showing that I have a high balance in savings (from tax refund). The two months prior to that my balance was kinda low because I made large payments to pay off credit cards in preparation for applying/improving my credit score. Would it be better to wait until that better bank statement comes out at the end of the month?
The idea is that they want to see that you are NOT PUMPING UP your savings artifiically and this is pretty much EXACTLY what the big tax refund will look like.
As long as you have the money you need for downpayment and closing costs submit the statements that look most representative of your 'normal' situation.
IF YOU DO NOT HAVE THE FUNDS FOR DOWNPAYMENT AND CLOSING DO NOT GO SHOPPING FOR A HOUSE!!!!
I'd think getting a tax refund at the normal time of year is a little different than pumping up my savings "artifically" with a large gift. I now have the funds necessary for closing on a house, thus why I waited until now.
You may feel that way, and I completely agree, but the folks that lenders employ to verify documents have pretty narrow handbooks to follow. As look as you have the ratios of debt::income you really want to stay "under the radar" with the crazy document review guidelines they have...
One big deposit and an ensuing outsize balance is an alert in their minds, you might be asked to provide further documentation that the refund was that and not some kind of a loan or other attempt to pump up your accounts artificially. Sounds nuts, but the lenders were never know for having a lot of common sense, if they were the mess we are in now would have been averted!
You'd be fine w/ the large deposit from your tax return. If it were a regular deposit, I'd say submit your last 2 statements. But the fact that you can easily prove that the large deposit is from taxes (I assume it was direct deposited?), it won't cause an issue.
Amanda is right. A large deposit from a tax refund is not a problem when doing a loan, especially if it is a direct deposit from the IRS.
That said, if you have enough in your account before the tax refund, then you can just give those bank statement and be done with it. Either way shouldn't be a problem.
My bank statements of say 3+ months ago are fine, but 2 and 3 months ago are lower than normal because I paid off those credit cards. Hopefully submitting the one that will come out at the end of the month with the large end balance, plus the not so hot one from the month prior will sort of balance eachother out. Alternately, it will look like I was broke prior to my tax refund. :-I
You are over thinking this, it is really a double check against any attempt to claim funds that you don't have or borrowed, and admittedly weak one.
If you have too little in the account for closing & down payment they'll want to know where its going to come from, and then you say "OH THAT account" that you forget to send the statement.
The idea is that you don't want to have some goofy situation where you borrowed the whole pile of dough for dp and other costs if it just appeared in your account it'd be a red flag. If you can clearly show "came from IRS " just be prepared to do that IF THEY EVEN ASK.
Not a big deal, sorry if I added to your paranoia. My rule of thumb is "assume large lenders rules are moronic but comply with if asked and avoid drawing attention to yourself at all costs"...
I'm supposed to submit the last 2 months bank statements with my mortgage application. My new statement comes out in a few days showing that I have a high balance in savings (from tax refund). The two months prior to that my balance was kinda low because I made large payments to pay off credit cards in preparation for applying/improving my credit score. Would it be better to wait until that better bank statement comes out at the end of the month?
Large deposit from tax refund is totally acceptable. Doesn't matter if your balance was low prior. Get an imaged copy of the deposit from your bank that shows the IRS check. Same amount will show on your tax return. Easy to verify this one.
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