Common conditions on a loan approval

The Broker Life

One of the most common conditions we see on approval letters is to source-proof large deposits. Many borrowers don’t realize that by depositing large amounts of money into their bank accounts they may be creating more work for themselves when seeking mortgage lending.

On a Conventional loan, the typical large deposit is considered any deposit greater than 50% of the borrower’s gross monthly income. For example, if a borrower makes $3000 per month prior to taxes and deductions, any deposit for more than $1500 must be sourced. With this being said, Underwriters look at the overall financial situation of the borrower to determine the need for proof of deposits.

Most investors will underwrite the file to the Fannie Mae and Freddie Mac guidelines but keep in mind that other lenders may have overlays in place regarding this. For example, if your borrower makes about $100,000 per year and has a significant amount of money saved, you most likely will not see any conditions for deposits less than the 50% standard. However, if your borrower has just enough money in their account to cover the down payment, the Underwriter may question a smaller deposit.

Government loans are in a completely different realm. Any deposit greater than 2% of the loan amount must be sourced. For example, if the loan amount is $100,000, you must source any deposit larger than $2000.

You may be wondering why lenders and investors care so much about large deposits. One of the most important reasons large deposits are checked is to confirm that the borrower has not taken any new loans against this money that would create a higher debt ratio. If the borrower takes out a loan and has a new payment added into their monthly obligations, it might push the loan out of an approval status.

Knowing these guidelines when you are reviewing your borrower’s bank statements is very important. Not only will you prevent additional frustration during the middle of the transaction, you will present yourself as the expert and be able to set the correct expectations up-front. A best practice is to take a moment to glance through the statements when your borrowers first send them to you, and ask them right then for the source of anything above the large deposit amount. Being proactive up front will help you and your borrowers in the long run.

We have build a brand of professionalism and excellence, as well as having loan products to help more people. That is our mission. Call us today and one of our professional Mortgage Loan Officers can help you get started.

CALL TODAY 702-507-4170

www.superiorml.com 

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About Superior Mortgage Lending LLC

Superior Mortgage Lending LLC is a full service mortgage broker located in Las Vegas, Nevada. Our goal is to provide excellent service to you throughout the process. NMLS # 372130 Nevada License # 3582 California License # 603K964 Arizona License # 0119906 8867 W Flamingo Road STE 200 Las Vegas, NV 89147 (702)507-4170 / www.superiorml.com
This entry was posted in 15 Year Mortgage Rates, 30 Year Mortgage Rates, Commercial Real Estate Lending, Commerical Loans, Conventional Loans, Current Rates, energy savings, FHA Mortgage, FHA Purchase, FHA Streamline Refinance, Government Loans, Home Mortgage, Home Refinance, Jumbo Loans, Las Vegas Home Mortgages, Las Vegas Mortgage Broker, Las Vegas Mortgage Company, Las Vegas Mortgage Lender, Loan Programs, mortgage broker in las vegas, Mortgage Interest, mortgage loans, Mortgage Refinance Arizona, Mortgage Refinance Nevada, real estate las vegas, refinance loans, VA Loans, VA Loans Las Vegas and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

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