When applying for a loan, lenders need to verify your financial information to ensure that you are eligible for the loan. This process is called underwriting and involves assessing the level of risk you represent before a lender takes on your loan. To do this, lenders usually require two of the most recent bank statements from the borrower. Insurers use a subscription to analyze your finances and verify bank statements.
This subscription helps lenders instantly access account details, work history, balances, and other important information. Without access to this data, it can be difficult for lenders to make the right decisions when it comes to approving loans. When reviewing bank statements during the loan approval process, insurers look for certain red flags. These include inflated income requests, current debts, and any source of income used to qualify for the loan.
If your overall financial situation is clean, you are more likely to get approved for a loan that works for you. To verify bank statements, lenders send a POD form (proof of deposit) to a bank to receive confirmation of the borrower's financial information. In cases of donating money, lenders may request a gift letter explaining that the funds are provided free of charge and not as a loan. For government-backed mortgages, lenders may require statements of between 6 and 12 months if you are withdrawing cash with a higher debt-to-income ratio (DTI), if it's a property with more than 1 unit, or if it's a giant loan.
Insurers may deny a loan if the sources of the funds cannot be verified or are not “acceptable”.