Why do banks need bank statements for a mortgage?

Why do banks need bank statements for a mortgage?

1. To show the down payment

If you are purchasing a home, you will need a down payment and the bank will ask to see that you have those funds ready and available in an account(s). By the way, you cannot alter the statement by blacking out transactions or censoring anything in any way. You’ll understand why below.

2. To show income

Sometimes the lender will ask to see payroll deposits arriving in your bank account when they are not convinced by the paystubs or other income documentation. For example, if you are paid by personal cheque, the lender will likely ask to see regular deposits. If you are self employed, they will almost certainly ask for bank statements.

3. This is a lesser known reason: to check activity

The lender will also check to see that you are not making other regular payments. Such payments may need to be explained as they would indicate a personal debt or liability of some kind that is not reporting to your credit bureau. They don’t usually ask for statements TO check such activity, but they will take notice. This is a big reason why they won’t let you censor it. A lot of people feel that this is an invasion of privacy because they will see how and where you spend your money and the different stores that you visit. But they really don’t even pay attention to that. Also, you have the right to refuse allowing them to see your transactions but remember, they ALSO have the right to refuse to lend you the money! 😉