Applying for a home loan can be nerve-wracking and can feel a little intrusive. You may, like many others, find yourself asking “why exactly do you need to see my personal bank statements?” 

Zippy Follows Lending “Best Practices” from the Finance and Mortgage Industry 

Zippy understands that sharing financial information can feel like an invasion of privacy. However, we are committed to adhering to best practices in the mortgage industry. After the industry collapsed in 2008, these best practices were established to protect everyone involved in mortgage transactions – both lenders and borrowers.  

Avoiding Another 2008 

Verifying a borrower’s ability to repay a loan is the chief concern for lenders, and benefits everyone involved! Prior to 2008, lenders were giving loans to borrowers even if they couldn’t show the ability to repay. Many borrowers found out after they moved into their dream home that they couldn’t afford the payments and thousands of people defaulted on their loans and the banks ended up foreclosing on their homes. Zippy cares about our borrowers, and we want to make sure our borrowers never have to go through the pain and trauma of losing their homes. 

Calculating Ability to Repay 

To avoid this outcome, lenders like Zippy need to be able to review your financial history and obligations to verify that what you say you have in the bank is accurate and likely to continue. How do we go about doing this? You got it – by looking at your bank statements. Bank statements assure us that you can repay the loan -- meaning you can pay back what you borrow.  

Why two months? What are you even looking for? 

Zippy will ask you for the most recent two months’ statements from any account that you intend to use to qualify and/or accounts that the down payment will be paid out of. Two months gives us enough of a history to see if there are any concerning trends in your deposits, or if there are any debt obligations you pay each month that didn’t show up when we pulled your credit. 

The first thing Zippy will confirm when you submit your bank statements that you have enough cash in your account to cover the cost of the down payment. For example, if you told your Zippy Guide that you have $10,000 for a down payment, but your bank statements reflect only $1000 cash, then Zippy is going to want to know how you’re going to be able to make up the difference before closing.  

The second thing our Zippy underwriters will check is if there are any credit obligations that have yet to show up on your credit report. If you’ve taken out a loan or borrowed money to qualify for this mortgage/credit, Zippy needs to know because it can affect your ability to repay the loan.  

Finally, we will check to see if you have any large deposits and/or withdrawals in your statements. If you do, we will just ask you to explain them to your Zippy Guide and complete and sign a Letter of Explanation for our files. Zippy just wants to make sure that your money isn’t coming from or going to any shady sources or people – because being in prison for financial crimes would definitely impact your ability to repay the loan. 

What if someone gave me a large amount of cash as a gift?  

If you have received or are planning to receive any sum of money as a gift, you will want to disclose that to your Zippy Guide. Zippy may ask for a gift letter from the person who gave you that money, or we might even need to see their recent bank statements. This is to be sure that the funds are coming from who you said they are coming from and not from a source that requires repayment (which would affect your ability to repay your mortgage). 

This seems like a lot. Are you sure all this hassle is worth it? 

Yes!  Homeownership is a journey worthwhile, and rest assured, Zippy isn’t trying to pry into your private business. We just want to protect you against any possibility of foreclosure in the future. Your Zippy Guides are here to advocate for you and to get you into a beautiful home that you can enjoy for decades to come.