Understanding the Essentials: Verification of Deposit for Mortgage Approval§
A verification of deposit (VOD) is a critical document that enables a mortgage lender to validate the borrower’s bank balances through their financial institution. Upon a lender’s request, the bank provides not just the current data but also an average of the borrower’s bank balances over a two-month period.
How It Works§
Here’s a step-by-step look at the VOD process:
- Authorization: The borrower must sign a form allowing their banking institution to release their financial information to the lender.
- Bank Inquiry: Each bank listed on the mortgage application receives a request for verification of deposit.
- Response: The banking institution furnishes the lender with details of the current account balance and previous two months’ average balances.
Simplified Process for Multiple Institutions§
In scenarios where multiple banking institutions are involved, the lender can issue an umbrella authorization form for the borrower to sign. This form permits the lender to request necessary financial information from all relevant banks.
First vs. Second Mortgages§
- First Mortgage: For initial mortgage applications, lenders must send requests for verification directly to each bank. The banks, in turn, send the completed forms back directly to the lender without borrower intervention.
- Second Mortgage: For second mortgage applications, borrowers themselves can initiate the VOD requests, but banks are still required to send the completed documents directly to the lender.
Understanding the role of VOD in the mortgage application process can smoothen the path to securing a desired loan with minimal hitches. Research your banking options and be prepared to quickly sign authorization forms to facilitate speedy financial verifications.
Related Terms: Proof of Income, Mortgage Underwriting, Loan Approval Process, Financial Statements
