No, it's not a T-Rex, aka Tyrannosaurus Rex killing your mortgage loan. It's your 4506-T.

Reblogger Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Real Estate Agent with Charles Rutenberg Realty NAR 274504721

Buyers need to work with a well seasoned mortgage representative! Follow their advice! Don't make any large purchases if you are planning on purchasing a home!!!  Be prepared to let your lender see the last couple of years of your tax returns - work WITH your lender and LISTEN to what they have to say!

Jeff's post also covers little known facts about having and declaring that second job!

 

Original content by Jeff Belonger

 

warning - 4506 t - can kill a mortgage deal

 

In the ever changing world of mortgages, you really need to stay on top of what is going on. So many think it's simple when pre-qualifying a borrower. But if you don't ask the right questions upfront and get very detailed, even the cleanest of deals could crash and burn.

So what is a 4506-t and what is its importance in the mortgage process?  Basically it's a form used by lenders that allows them to request a transcript copy of your tax returns from the IRS.  In the past, this form most times was used for those that were self-employed or to keep fraud in check. If a lender suspected something funny regarding your income, they could send this form to the IRS.

 

 

taking a much closer look at all mortgage loans

 

Your income is being examined very closely now by most lenders. No matter if you are self-employed or the lender/investor thinks there might be fraud involved, 4506-t's are being pulled on all borrowers. Now, I have heard some lenders brag that they aren't doing this, but is that true?  I don't know, but I can tell you this, all the lenders that I know are doing this.

So I am a loan officer who pre-qualifies a borrower, asking them their current income situation. The primary borrower has a full time job at their current job of 8 years and makes a salary of $85,000 a year. Hey, it sounds cut and dry, right?   Wrong !!! The borrower also has a side job in which she has been collecting and selling antiques for 3+ years. She even files taxes on this legally. Okay, so what's wrong?  Well, she shows a loss on her tax returns. On a salary borrower, in most cases, we just have to collect W-2 forms for 2 years on FHA loans. Some lenders require the borrowers full tax returns no matter what.  But what happens if your lender doesn't require this? Hence the reason now for the 4506t. When we get the transcript back from the IRS, it will list what she grossed on her primary job and show any other types of incomes, no matter if she showed a profit or a loss.  In this case, the borrower showed a major loss, which had to be counted towards her income. And just because of this, it killed the deal because her qualifying ratios went through the roof.

 

 

 

Summary : No matter what the loan officer asks you, especially when it comes to your income, give them every bit of information for the last 2 years.  If the loan officer tells you that they don't need your other sources of income, especially if it's showing a loss, just pick up and leave.  Find a new lender. The 4506-t is extremely important and could be the difference of you moving into your house or not. And this doesn't matter if you are applying for a FHA loan, a USDA loan, a VA loan, or a conventional loan. It all comes down to the lender or the investor buying the loan.

 

 

 

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For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

_____________________________________________________________________________________________________________________________

 

 

follow Jeff Belonger on Twitter

 

The FHA Expert's fan page on Facebook     Add Jeff Belonger to your network @ LinkedIN

                                                                            FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

Follow me on:

Mortgage Myth Busters

 

______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

BarbaraJo, Another good reason to be upfront about EVERYTHING financial so there are less surprises later on in the qualifying process! Thanks to Jeff for a great blog and thanks for re-blogging it!

Aug 02, 2010 08:50 AM #1
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Wanda - So many buyers think they can reveal only partial information and still get a loan - WRONG!

Aug 02, 2010 09:17 AM #2
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Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
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We have been seeing these requests for the last year here. It is good to prepare your buyer for it before they see the mortgage broker.

Aug 02, 2010 10:28 AM #3
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
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Marcy - if this had been going on a few years ago we would not be in the mess we are now!!! This is overdue!

Aug 02, 2010 10:33 AM #4
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Paul McFadden
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Barbara Jo: Thanks for the post. I could count at least one deal that didn't happen because they were self-employed and had big losses.

Aug 02, 2010 10:34 AM #5
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Paul - and so many are unaware of this problem lurking in the background!

Aug 02, 2010 10:51 AM #6
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Jeff Belonger
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The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Barbara Jo...  again, thanks for reblogging this one... it's good to read some of the comments in here and that this post got some activity on such a critical and important topic that isn't talked about much.

jeff belonger

Aug 02, 2010 06:25 PM #7
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Jeff - and that is the problem, that this is not discussed often! great post!

Aug 03, 2010 05:37 AM #8
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