Will my tax returns ruin my mortgage approval?

By
Real Estate Agent with Re/Max 10 New Lenox Illinois
Will my tax returns ruin my mortgage approval?

Most often when applying for a home loan, your lender will request your federal tax returns for your pre-approval.


In most cases, W-2’s, paystubs, and full tax returns are reviewed for mortgage pre-approval and final loan approval. In addition, lenders pull tax transcripts for all borrowers directly from the IRS. This guideline ensures that the income presented to the IRS is the same income provided for the originator for preapproval income calculation.

One very common item on a tax return that can affect buyers pre-approval can be found on Schedule A of Federal Tax Return.

 

Schedule A is completed when itemizing tax deductions. At the bottom, a taxpayer can claim “unreimbursed employee expenses”, and under the guidelines of Fannie Mae and FHA, “Unreimbursed business expenses must be subtracted from gross income.”

 

This means a potential denial during the underwriting stage of the approval process when the tax transcripts show the borrower has claimed unreimbursed employee expenses.

 

For example: A client with a yearly salary plus commissions of $80,000 and has $15,000 in claimed unreimbursed employee expenses on their 1040, could see a $40,000-$50,000 reduction in buying power.

 

In order to save time from looking at homes way out their price range, buyers need to figure out their debt-to-income ratio and tax returns with a trusted lender like Vincent Redd to ensure that their mortgage application gets approved and they find the right home for the right price.

Feel free to contact Vincent Redd for any questions.  His contact information is below.   Have a great week! 

 

Vincent Redd
Senior Mortgage Consultant

Office:(630) 748-7473

Efax: (773)  435-6468

Cell: (773) 255-1698

vincent@neighborhoodloans.com

Individual  NMLS#233273

Office          NMLS#222982

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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Dale Taylor ... I'm sure Vincent would report that he asks about this specific issue during intitial conversations.  And just for the very reason you state.  No surprises ... or disappointments that way ...

Gene

Jan 15, 2016 01:59 AM #1
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Rainmaker
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Dale Taylor

Realtor = Chicago Illinois Homes Townhomes Condos
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