Recently the problem I keep running into is after talking with a client and discussing their monthly income and over the phone their income “sounds” great, BUT, I always go over all needed documentation. Because although you may think you have a good steady income, the documents to prove it, is where we come across possible hurdles.
Whether you are self-employed or a W2 employee. All documentation needs to be collected. Your paystubs, W2’s, verification of employment (completed by your employer), tax returns, etc. All of this needs to be addressed. You want to make sure all has been thoroughly analyzed.
From what I am seeing, the one consistent problem I come across is many of you don’t show enough income on your taxes. Too many of us “write off” too many things. Now I am NOT a financial advisor, nor a tax accountant, CPA. BUT when you “write off” too many expenses, it shows your net income as a loss. You may have avoided big tax payments, or maybe you got a great refund, but at what expense? If you know that you make “X” amount of money each month, BUT on paper you show “-X” amount, this is where there is a problem. And unfortunately the problem can’t get fixed until the next year, after you file your taxes.
The biggest suggestion I can give if you are looking to buy a home in the next year, talk to a lender AND talk to a tax accountant (CPA), explain to them that you are wanting to buy a home or even refinance your existing home and you want to make sure you accurately show a good income not a loss. And ask yourself is avoiding tax obligations or getting a big refund worth it? And in getting a refund is it better to pay off existing debt or put it aside for down payment?
Not showing enough income and tied together with high debt can hurt you in qualifying for buying a home and/or refinance an existing home.
Again, not a CPA or a financial advisor but speaking from experience and seeing it happen way too often, I strongly suggest you take a second look and meet with a CPA and/or financial advisor, if you are wanting to take advantage of this low rates and refinance or buy a home next year.
If you have any questions or need some good resources please give me a call or email me. If you would like to get pre-approved, please complete a secure online loan application.
Sincerely,
Ray Williams
Branch Manager
Summit Mortgage Corporation
303-779-0591 ext. 101
