ShareThisMake Sure Your Lender Reviews Your Tax Returns!
The first step in the home buying process is to get pre-approved by your lender. Please make sure that your lender reviews the last two years of your tax returns before issuing you a pre-approval letter. The reason this is so important is because I’ve had at least 10 clients that have been referred to me with pre-approvals in hand that did not qualify for what their pre-approval letter said. Their lenders did not review the clients tax returns before issuing the pre-approval. I asked the clients a couple of questions like “do you write off uniforms, gas mileage, and other non-reimbursable items on your tax returns.” All of them told me yes, so I sent them back to their lenders to have them review their tax returns. After each of the lenders reviewed their clients tax returns they found that the buyers did not qualify for the original pre-approved amount. If I would not have caught this up front those buyers contracts would have fallen apart on their properties after the lender would have collected their tax returns and noticed the information.
Most good lenders and especially the ones I work with, will not issue you a pre-approval letter until you have provided at least 30 days of paystubs, 2 months of bank statements, 2 years of W-2’s, and 2 years of tax returns. Don’t let your transaction fall apart because your lender has not reviewed your tax returns before you have found your house! If your lender doesn’t ask to reveiw your tax returns tell him or her you want them reviewed anyway. In the past you did not have to worry that W-2 employess would be writing off items on their tax returns but we have noticed accountants being very creative and writing off many items which lowers the buyers tax liability but also lowers their buying power.
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