Buyers - Five Things to Consider About Income

What a great post! Thank you for sharing this post.

Jordan, great points for those who are considering buying a home, especially the debt ratio factor

Jordon - great post for your buyers.

RE: #4...lenders WILL require federal tax returns, regardless of income source, and WILL verify with the IRS that the tax returns provided match the returns on file with the IRS.  Buyers are required to sign an IRS 4506T form which allows lenders to do the transcript verification. 

For self employed borrowers that will need their 2010 income to qualify (lenders typically use a 24 month average and maybe 2008 was very low), verifying the income with the IRS can be tricky at this time of year and will get worse as we approach April 15th.  It can take 4-8 weeks for the returns to "show up" in the IRS' system.  No transcripts, no loan. 

We request the IRS transcripts from the IRS as part of our pre-approval process, makes for a smoother escrow.

Thanks again for the post.

I have started asking buyers to bring their Tax returns to me before we write any offers. Taxes are causing a lot of deals to fall apart.

Great post and tips for buyers and realtors!

Thanks for the good read tonight....  I like to get tips anytime.

Patric a/Seacoast NH & ME

This is a great post, Jordon! Buyers need to know these things ahead of time. I've had clients who seem to make plenty of money, but once the lender takes a look at things, they barely qualify! Thanks for sharing!

A very  well written post.  Buyers will be better off if they undertand what the lender will be looking for  and give them the opportunity to get all the needed information together.  In some cases, they may need to "clean" up some issues.

You might want to add that they must have been in their current field of work for two years. Also if they have a second job to supplement their income they will need to have hld it for at least a year. Some lenders will demand two years on the second job too.

Jordan:

good information for first time home buyers.  Buyers need to know what price home they can qualify before they start looking.  Otherwise it is just a waste of time.

Thanks for the post. I talked about the same things to two prospective buyers this week.

This is all really good material for a buyer to take into account. After being a Realtor for several years I decided to start doing mortgages to for a better understanding of what needs to be done in order to qualify for a loan. I see that a lot of buyers don't know or take into account their employment status. If you are in your job for less than 2 years, you are going to have a problem. If your job is elsewhere and you "telecommute" to a different state you could also get denied. It just happend in my office with two banks.

Jordan,

An excellent blog.  A Realtor who shows people a home without a solid pre-qual ( solid meaning the lender has seen all income and asset documents, a credit report, and run DU) is a tour guide.  It is refreshing to see a Realtor explaining all this to his clients.

A lender looks at several things: credit score, income, assets, and the collateral (value of the home).  It used to be a loan could be obtained with just one of these items.  Now, it takes all of them.

I am a mortgage loan officer and licensed financial advisor.  My responsibility, as I see it, is to get the right mortgage for my client in light of their house needs and their long and short-term financial goals.  It amazes me that after several years of "foreclosure crisis", I still see people willing to become house poor.  They have a beautiful home, but can't afford to go to Chili's for dinner and their retirement plan goes unfunded.  

Great points! Most people get prequalify but you wonder if they really understand what of their financial situation was used to come to that conclusion.