loan officer question?

Question

how come the bank wantts to see funds in your account when you say you make 7,000 a month? and they expect you to have 12,000 in the account! the loan officer asked how much i make per month befor taxes. i said 7,000. now the bank expects me to have 12,000 in my account for them to varify if i can afford the house we want to buy. this is crazy. why so much? is this right? should my loan officer fight to lower the amount? what should i do?

Answer 1

I used to be a loan officer. Typically, when you are purchasing real estate the lender wants to see that you have enough funds in cash for closing costs.

Also, if you are doing a stated income verified assets type of loan, then, the lender will need to verify how much cash you have on hand to justify the income you have stated on your loan application. Stated income loans do not require the borrower to verify income with paystubs, W2's, or tax returns. Therefore, the lender will verify cash on hand to justify the income listed on the application.

Some loan officers will submit a borrowers application as a stated income loan without the applicants knowledge. This is done by the loan officer to help the borrower qualify for a loan by overstating the income. This is an unethical practice and can lead to borrowers getting loans they can not afford.

Contact your loan officer and ask him why you need to verify so much cash on hand. Ask him to go over the details of your loan including interest rate and apr, monthly payment, approxiamately how much you will need to bring to closing, what type of loan you have for example an ARM, fixed rate, interest only, combo loan, etc.

And most importantly ask that a good faith estimate and all disclosures be sent to you right away. Make sure you read the disclosures before signing them. The disclosures will have the details on the type of loan you are getting.

If your loan officer tells you he can't get you a good faith estimate then find another loan officer because he is probably trying to hide something.

Shop other loan officers to make sure you are getting a fair deal and the best deal for you.

Answer 2

The $12,000 is for the down payment and other cost. Or perhaps, the money would be to cover incidentals needed upon moving into a new house. They don't want you to have to run up extra debt furnishing the house after you buy it. Basically, reasons like that.

If you don't understand something going on in the process of buying a house make sure you ask for an explanation. Don't wait to be blindsided by something you didn't understand.

Answer 3

Alot of banks figure is you make $7,000.00 a month you should be able to save some $$ too. They look it like "is that too much to ask, that a potential borrower who we are going to lend a few hundred thousand dollars too, has a two months of income in a bank account?" Really it isnt too much to ask, you should at least have that much saved either in a 401k or whatever. On a purchase or a high LTV refi 95 out of 100 banks usually want to see either 2 months reserves ( PITI=principle, interest, taxes, and insurance) or double the income in reserves. Good luck!

Answer 4

They like for you to have a cash reserve in your saving so if something happens to your job you will still be secure finacially until you find another job. If you don't agree with your current loan company look around for another, you don't have to stay with someone you feel like is taking advantage of you. The loan officer should also tell you up front a estimate of the amount you will need at closeing, and you usually will have to pay your first years worth of insurance. Good Luck!

Answer 5

The bank is extending an offer of cash to you. THey would like to have an idea of your "cash habits" to make sure you will pay them back.

Answer 6

THey may expect you to have that available for closing costs.