Nevada Real Estate >> Las Vegas Real Estate Specialist: Florida: Palm Beach

 

 

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.

 

 

 

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.

 

 

 

_____________________________________________________________________________________________________

 

                  

                                                                                                           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:

 

 

_____________________________________________________________________________________________________

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!

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

 

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

 

Are mortgage commitment dates important?  YES…

 

Mortgage Commitment dates are very important for several reasons.  I wrote about this below... please read -

What time is it? It's COMMITMENT time!! Has your commitment letter been on time?

The problem that I am seeing now more and more?  I am seeing unreasonable commitment dates in the agreement of sale. I am not the only one that has noticed this because I have asked a few loan officers that I respect and they have agreed.

 

 

 

 

We all know that realtors, buyers, sellers, and lawyers get upset when commitment dates are missed.  Just recently, I had 2 different transactions that had unrealistic commitment dates in my opinion.

 

Here are two examples of what I think are unrealistic commitment dates.

Buyer # 1

Contract signed 3/31/10 -  Mortgage Commitment date 4/16/10  - Closing date   4/28/10

 

Buyer # 2

Contract started and signed by buyers on March 11^th  - seller’s signed March 17^th  - When the contract was drawn up, the commitment date was set for 4/2/10 with a settlement date 4/30/10. Because of the delay with the seller accepting the agreement of sale, the commitment date was never extended.

 

 

So, why were these commitment dates unrealistic? 

It's called a time line. There are certain things that need to take place in order to give a good and accurate mortgage commitment letter. Sure, many lenders and loan officers can give conditional commitment letters. And I am talking about such letters that have conditions out the ying yang. Almost like it was never underwritten.

What needs to be done to perform a good commitment letter in order to meet that commitment date?

     1. An acceptable appraisal - Many of us don't order an appraisal until we know that we have a fully executed contract.  Now, an appraisal has to be ordered, a date and time set to inspect the home, and then that appraiser getting the appraisal back to the lender in a timely manner.  It could take 2 days to order the appraisal, 3 days until the appraiser gets out to the property, and 3 more days until the appraiser gets it back to the lender. Just right there is 8 days. And in some cases, this could be a quick turn-around time. Keep in mind, it also depends on the type of loan, if one is dealing with the HVCC, or just the fact that the appraiser is having a hard time contacting the listing agent. Overall, it could be a solid 10 business days until a lender sees an appraisal and this would not include weekends. So if my numbers are correct, this is 13 days, almost 2 weeks.

     2. Time of mortgage application - In regards to my example number 1 above?  The borrower couldn't meet with me and get me their appropriate information until April 5th.  That means I have roughly 11 more days, 9 of them which are business days, to get a commitment letter out in time.

     3. Difficult loans - Each and every borrower is different from the next. I keep hearing some realtors say that x,y,z lender got such and such borrower done very quickly.  All I can say is that each and every buyer is different from the next. Some loans are easy and some are difficult. In many cases, once we start to dig deeper into that borrower, we need more information. A good example are self-employed borrowers. Sometimes we need more proof for write-offs to justify more income, etc, etc.

     4. Underwriting Time - Each lender is different and each time period can be different if real estate is busy or slow. It's safe to say that it should take 5 business days for a loan to be in underwriting,  But this time needs to be factor into the whole equation.

 

Overall, as you can see, there can be many reasons why it could take more than 2 weeks to get a realistic commitment letter to meet the commitment date. If you take my #2 and # 4, subtract the underwriting days, it says that I have 4 realistic days to process a loan.  And this is just not enough time.  And what about the appraisal?  What good is a commitment letter if it is subject to an acceptable appraisal?  So.....

 

 

 

Team Work & Communication

So how can a realtor help in achieving the commitment date?  They should be calling up the loan officer to get a better feel for that client. To find out such things as their current underwriting time. Is the borrower complicated?  Meaning, do I have everything that I need to properly process and underwrite the deal. ... and so much more.

Overall... keep in mind everyone, that each borrower is different from the next. That we see too much misleading advertising for 10 day closings from certain lenders. (read the fine print to see how this has to happen) And lastly, that we all need to work together. Don't hesitate to ask and not assume.

 

 

 

Food for thought…  A 30 day closing in my opinion is very realistic, but a commitment letter due in 14 days is not. Weekends and appraisal times need to be considered.

 

 

_____________________________________________________________________________________________________

 

                  

                                                                                                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 !!!

 

 

_____________________________________________________________________________________________________

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!

Important Information about the First Time Homebuyers Tax Credit

 

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