Mortgage lenders, in particular, usually always require a deposit check before approving a mortgage on a home.
A deposit verification is a document prepared by a person’s bank that certifies that they have a certain amount of funds on reserve at the bank, such as in a checking or savings account. These letters can be prepared after a prospective borrower has applied for a loan at another lending location, such as a car or home loan. Mortgage lenders, in particular, generally always require a deposit check before approving a mortgage.
The process to obtain this verification is usually very simple and usually only requires a visit or phone call to the bank to request the letter. The bank may send the letter directly to the creditor, but may also be willing to provide you with a copy. The letter must be made on official bank letterhead; The creditor can also call the bank to verify that the letter is legitimate and that the funds are there. Verification of the deposit will be kept with the loan application for future reference.
The reason a deposit check is often required is because it allows the lender to see that the potential borrower has the ability to put a down payment on whatever they are buying and can indicate whether he or she has the ability to make monthly payments. This, combined with a credit score and credit report, can tell the lender if the borrower has a good credit risk and is likely to repay the funds as agreed. If the lender discovers that the borrower lied on his application about the value of the funds or the existence of certain accounts, he is likely to reject the loan application immediately.
Some people also use the term “deposit verification” to refer to a receipt the bank provides after a customer makes a deposit into a bank account. This is usually a paper receipt that should be kept until the monthly statement has been entered, showing that the funds are in the account and in the correct amount. Some banks also offer email deposit checks and can automatically send an email to the bank’s customer when a deposit is made to an account, or when a withdrawal is made. This can be a good way to track account activity.