Okay, you have done your homework by watching HGTV, reading various blogs and even consulting a real estate agent on what you need to do to purchase a home. Among the prerequisites you were given, you were told to get a lender to pre-qualify you and you did. Now you are excited and ready to look for some real estate. But wait, not so fast! To avoid any headaches after you have found the home of your dreams, you should help your lender examine if you are really ready to shop for a home. "What are you talking about, Lee?" you maybe wondering. Well, believe it or not, with the restrictions that have been placed now on the mortgage industry to curtail the number of future foreclosures and distressed homeowners, what you think is your income may not really be.
To make sure you are getting an accurate assessment from your lender, ask your lender to actually review your last 2 years' tax returns to verify your adjusted net income BEFORE even looking at homes. They may tell you it does not take all of that, but I plead with you to insist - you will thank me later, I promise. The days are long gone where you can just tell someone you make a certain amount and that be sufficient. Most lenders are requiring that your adjusted income on your tax return be the determining factor of how much house you can afford. Yet, you may start shopping for a home and they not know this amount. For some, the adjusted income as reported on your income taxes maybe $5,000, $10,000, $20,000 or plus less depending on deductions that you take, income that you do or don't accidentally report, etc.
Sadly, this really is an all-to-common headache that buyers experience - they find a home they adore, go through the rigorous process of getting an accepted offer and having various inspections, only to learn (after hundreds of dollars have been spent potentially on inspections, appraisals, etc.) that because they deducted their mileage (or some other item), their income is actually $7,000 less than what they thought and will not be able to qualify to purchase this particular home. Now don't get me wrong, once this is discovered, for many buyers there are ways to solve this including amending a tax return if there is an error, getting a financial gift from family, paying off/down a debt, etc. But I can assure you, you want to be spared this headache and really avoid it all together if possible.
Need more details on this? Are you already in the middle of this headache and need help? Contact places2love@gmail.com or 404.444.5777. Happy House Hunting!
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