Sonoma County Mortgages

All financing provided by New American Funding

(707) 217-4000 | Prequalify Now
  • Home
  • Purchase
    • How Much Down Payment To Buy A Home?
    • How Much Income You Need To Buy A Home
    • How Much Should I Save For Buying A Home?
      • How Rates Affect Payment
    • No PMI Mortgages
    • FHA Loans
    • Sonoma County Disaster Loans
    • Jumbo Loans
  • Refinance
    • Mortgage Rates
    • Does It Make Sense To Refinance?
      • Get Your Refi Paperwork In Order
    • How To Pay Off Your Loan Faster
    • How To Remove PMI
    • How Lenders Price & Quote Loans
  • Loan Programs
  • Payment Calculator
    • Mortgage Affordability Calculator
  • Blog
  • Videos
  • Scott Sheldon
    • Scott Sheldon
      Senior Loan Officer
      NMLS ID# 287389
      Direct: 707 217-4000
      Scott.Sheldon@nafinc.com
      Specializing in Residential Home Loans for Primary Residences, Second Homes, Investment Properties, Single Family Homes, Condos, PUDs, 1-4 Units.

Get Your Latest Rate Quote Now!

Avoid These Mortgage Mistakes When Filing Your 2013 Tax Return

February 2, 2014 by Scott Sheldon

Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Email this to someone
email
Print this page
Print

Pay Uncle Sam and qualify on paper, short Uncle Sam, risk your mortgage loan application. Gambling your financial future, by saving a few bucks isn’t worth the risk.

Following Actions That Halt Your Loan Application

If you are a W-2 employee…

Then….

Taking expenses you incur in the course of your job as a write off against your taxable income is bad news for your loan. The IRS Form 2106 unreimbursed business expenses kills a loan application because it reduces your gross income used in making the loan. If you have things like mileage, dues, office supplies, tools, you incur as an bona fide employee, these items are best paid for by your employer. You pay a buck, you’re reimbursed a buck, dollar for dollar, on each expense, hence no reason to write it off right? Lenders will always wants your two most recent years income tax returns.

*Mortgage Solution: if you can support with documentation specifically what the 2106 expenses were on the tax return along with an employee letter explaining the nature of their reimbursement policy, and you can show these expenses were a one-time occurrence you can petition for the mortgage company to omit the business expenses allowing you to qualify for more house.

If you are self-employed…

Then…

Writing off as much expenses as possible will do wonders for your tax situation because it will show  low income figures and or net losses. This comes at a cost- yep, your loan application. The relationship between the total income and other liabilities is extremely important for lenders when determining whether or not to make your mortgage loan. Showing less income to offset a housing payment spells bad news for any self employed consumer seeking home loan financing.

It gets more technical for self employed individuals, loan lenders use a twenty four month averaged income. In other words, if you show high income one year and low income another year, the lower incomes returns will be counted, which would reduce income. To offset the numbers, you would have to show double-profits in taxable calendar year.

*Mortgage Tip: Showing the maximum net profit and maximum numbers in the following fields; depletion, depreciation and business use of the home ( assuming eligible) followed by meals and entertainment help your qualifiable income. If business specific tax returns, same thing follows, you want to show maximum income, taking as little expenses as possible as this will show maximum income on paper necessary for handling a mortgage payment.

 If you own rental property…

Then…

Not claiming rental property on a Schedule E. when the property truly is rental property is hot lending issue. If you don’t claim the rental property as such, nor take depreciation and omit rental income, this also creates red flag for lending purposes- why? For starters, it raises occupancy questions which is a risk characteristic of every mortgage application.

If you have rental property, but somebody else make the mortgage payment, and you give them the mortgage interest deduction that you otherwise are entitled to, lender will want a detailed explanation and liability still remains as yours.

Filing your 2013 tax returns the right away? Need your 2013 tax returns for qualifying for a mortgage?

Obtaining tax validations on 2013 tax returns will take awhile as IRS isn’t even processing 2013 returns till February 1, 2014. Trying to secure mortgage in the next few months? Understand your transaction could be delayed if you need 2013’s income for qualifying.  Short of the 2013 tax returns, lender will need most recent years returns, 2012 and 2011 , along with month pay stubs and years’ W-2s.

As always be sure to speak with your tax advisor regarding your individual specific tax and income situation.

Need help with buying a home or refinancing? Talk to Scott Sheldon and start by getting a no obligation mortgage rate quote today!

Related Mortgage Advice from Scott Sheldon

  • Your Percentage Of Business Ownership May Change Your Mortgage Application Status

                          Lenders will classify you as a wage earner employee or self-employed. How file…

  • Mortgage Tip: Loan Qualifying For Self Employed Borrowers

    Loan qualifying for the self-employed hasn't gotten all that more difficult, it just feels like…

  • Quick Calculation For Determining House Payment

    As consumer taking out a mortgage loan, computing a house payment can be a time-consuming…

  • Carrying A Rental Property May Hurt Your Mortgage Chances

    Do you own rental property? If yes, and you're looking to borrow money with a…

Filed Under: Loan Qualifying, Mortgage Tips & Advice

SCM on Zillow

Zillow Reviews for Scott Sheldon, New American Funding

SCM on Facebook

SonomaCountyMortgages.com

Location & Contact

Scott Sheldon, Senior Loan Officer
NMLS ID# 287389
1450 Neotomas Ave Suite 115
Santa Rosa, CA 95405
1-707-217-4000
Email Us!

Copyright 2019 SonomaCountyMortgages.com · About Us · Sonoma County Loans · Privacy Policy · Terms Of Use · Legal · Site Map

NMLS Consumer Access © New American Funding. All rights Reserved. NMLS ID#6606.
Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

State Licensing | Privacy | Terms of Use | Electronic Consent Agreement

Connect With Scott In Your Inbox

Looking for a home? Real estate insider? Get connected with Senior Loan Officer Scott Sheldon. Scott stays updated on the latest in the mortgage industry, so you can stay updated with him!