You have to expect loan officers to scrutinize your finances when you apply for a mortgage. It’s common practice for them to look at recent statements from bank and brokerage accounts. They want to be sure your down payment comes from funds you’ve accumulated over time.
Personally, I have excellent credit status and can tell you that the screening process is going from invasive to unreasonable. The impetus is tighter government rules on money tracking.
Legendary economic forecaster Martin Armstrong puts his finger on the problem in a June 16th commentary titled “The Feds Are Hunting Money Retroactively – Is a Real Estate Crash Coming?” He notes that banks are now demanding explanations for any abnormal withdrawal or deposit of as little as $50 from as long as five years ago. If you lack documentation or fail to remember, you are deemed “suspicious.”
You can bet banks are sharing any “suspicious” account activity they uncover with the IRS.
Money Tracking Could Turn More Potential Home Buyers into Renters
“This type of unconstitutional tracking of money will eventually discourage people from getting mortgages and as buyers are discouraged in the USA, they will move elsewhere,” predicts Martin Armstrong. He has amassed an impressive track record in calling major turns in markets and the economy.
According to Armstrong, “We should expect prices to peak out in general, for this asset class is being hunted. It may be that the high end holds up better, but the low end that needs a mortgage to transact will find it increasingly difficult as the economy turns down, rates move higher, and banks back away from long-term loans.”
Avoiding the mortgage process and paying cash for a house means you don’t have to subject yourself to a financial audit by banks. It means you can truly own your home free and clear (except for the property tax obligations it generates). Paying cash for a new home isn’t an option for most people. But renting is.
You can always find individual owners locally who want to rent out their homes. The advantage of going through individuals as opposed to property management companies is that individuals are more likely to negotiate on terms. They are also less likely to demand credit reports and detailed financial histories.
Offering to pay an extra month’s rent up front can often help persuade landlords that you are a well-qualified tenant. They might then be willing to skip some of the intrusive paperwork and reference vetting that typically comes with a rental agreement.