I came across a fascinating issue that rarely comes up in the loan application process recently, and I thought I should share it with you. As many first time home buyers quickly find out, mortgage lenders can be a bit intrusive when considering whether to approve a mortgage application. This is for several reasons including federal regulations that require them to collect certain information, and more generally, lenders trying to protect against the types of bad investments that led the the now infamous "mortgage meltdown".
Lenders will demand to know things like who your employer is and how much money you make (and make you provide the pay stubs to prove it). A lender will typically require months worth of bank statements, and will question any deposits that don't correspond to your pay stubs. In short, mortgage lenders are very concerned with whether the person applying for a mortgage loan can afford to pay them back.