Will I be denied a mortgage due to withdrawals from ATMs from my bank account?

Short Answer:

Very unlikely. Mortgage underwriters will review bank statements looking for any large deposits or automatic withdrawals going to pay undisclosed debt. In the process of reviewing bank statements, an underwriter might question frequent and large withdrawals of money from ATMs. If this does occur, a written explanation about the withdrawals might be sufficient.

Longer Answer:

A few weeks back, someone on Reddit asked this question. Their particular question revolved around withdraws at casinos for gambling purposes. However, it is a question that comes up frequently in my conversations with borrowers.

Here’s what you need to know:

1. Context Matters

ATM withdrawals in themselves are not inherently problematic. Lenders understand that people need cash for various legitimate reasons. However, the context and frequency of these withdrawals can raise questions. For example, if your bank statements show frequent large cash withdrawals without a clear purpose, lenders might become concerned about your financial stability and spending habits.

2. Patterns of Behavior

Lenders look for patterns in your financial behavior. Consistent, responsible financial habits are a positive sign. If your ATM withdrawals are part of a pattern of erratic or irresponsible spending, this could be a red flag. On the other hand, occasional withdrawals for routine expenses are generally not a cause for concern.

3. Impact on Savings and Reserves

Frequent ATM withdrawals can deplete your savings and reserves, which are important factors in a mortgage application. Lenders want to see that you have enough savings to cover unexpected expenses and financial hardships. If your withdrawals are significantly reducing your savings, this could negatively impact your application.

4. Bank Statements

Lenders will review your bank statements to get a sense of your spending habits. Frequent large withdrawals that lead to overdrafts, or a pattern of living beyond your means can raise concerns. If a lender sees frequent overdraft fees, it may raise a red flag. Lenders want to ensure that you have enough disposable income to cover your mortgage payments.

5. Transparency and Documentation

If you have legitimate reasons for frequent ATM withdrawals, be prepared to explain them to your lender. For example, you pay in cash a cleaning or childcare service every week. Providing documentation or a clear explanation can help alleviate any concerns. Transparency is key in the mortgage application process.

Tips to Mitigate Concerns:

• Limit Withdrawals: Try to limit the frequency and amount of ATM withdrawals.
• Maintain Savings: Ensure that you maintain a healthy savings balance.
• Track Spending: Keep a record of your cash spending to provide explanations if needed.
• Provide Context: Be ready to explain any unusual withdrawal patterns to your lender.

Conclusion

While ATM withdrawals alone are unlikely to be the sole reason for a mortgage denial, they can contribute to a broader picture of financial instability if not managed properly. Lenders are looking for responsible financial behavior and stability. By maintaining a healthy balance in your accounts, limiting unnecessary withdrawals, and being transparent about your financial habits, you can improve your chances of mortgage approval.

If you have questions about withdrawals on your bank accounts, please reach out at teamjd@mainstreethl.com

These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.

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