newenglandho…, Home Buyer in Seekonk, MA

Will checking overdrafts cause my home loan to be denied?

Asked by newenglandhomebuyer, Seekonk, MA Sun Feb 10, 2013

I had this bright idea a few months ago to start a budget. I created reserve accounts where I allocate money for bills each week - then transfer the money over when the bill is due. Well, a few times, I didn't transfer the money over to checking in time - total stupidity on my part - and that caused my overdraft protection to kick in. It shows as such on my previous two bank statements. I've since rectified the problem by adding a grand into checking as a cushion, but the damage is done. Should we even bother applying for a loan right now, or wait until the overdrafts age off my statements? For what it's worth, we have a stellar file otherwise in terms of credit scores, DTI ratio, etc.

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8
Richard Shap…, , Framingham, MA
Sun Feb 10, 2013
BEST ANSWER
Your explanation seems reasonable. As long as you have rectified the issue I wouldn't worry. If you get a mortgage soon you may have to write an explanation letter for the underwriter. If you search goes on another month or two it will be a total non issue.
1 vote
Heath Coker, Agent, Falmouth, MA
Tue Feb 12, 2013
If the preapproval was done after the events, you have your answer.
If they happened before, ask the lender who preapproved you, what affect they will have.


(Please note: when you choose an answer as a Best Answer, or at least give a thumbs up, it helps those who answer questions here.)
1 vote
Meri Galstian, Agent, Boston, MA
Tue Feb 12, 2013
It will just look like a small blemish that they may explore further or ask for an explanation. But especially if everything else is clean as a whistle, you should be in good shape!

Best of luck.

Meri Galstian
1 vote
Wen Farina, Agent, Reading, MA
Sun Feb 10, 2013
I would be very surprised if that became a huge issue. It looks like you are a savvy buyer, be sure to get your own buyer's agent to represent you and guide you through the entire process. It does not cost you anything and it is always a good idea to have someone on your corner. Info@wenrealty.com
1 vote
newenglandho…, Home Buyer, Seekonk, MA
Sun Feb 10, 2013
Thank you! I honestly didn't sleep at all last night because of this. Even though we got pre-approved I am worried things will unravel during the underwriting process.
1 vote
Glad you got some great answers!
Flag Fri Feb 15, 2013
CH Naamad, Agent, Boston, MA
Sun Feb 10, 2013
Please refer to mortgage broker for an accurate answer to this question.
1 vote
Mario Pavli, Agent, Boston, MA
Sun Feb 10, 2013
Hello,

I don't think that's gonna damage your situation as much as you think. Overdrafts can be corrected and fixed and your loan (if credit & finances are in order) should be approved by the right lender.

Best Of Luck
1 vote
Richard Shap…, , Framingham, MA
Sun Feb 10, 2013
It shouldn't but just be aware that it could be asked about. You have a reasonable explanation so no worries.
0 votes
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