Personal Taxes-4506T….extremely crucial!

The 4506T is a form signed by borrowers that allows the bank to pull their federal tax returns for the last 2 years. Previously most banks would not retrieve the taxes, and qualify everything on reviewing current pay stubs and w2’s. That is not the case anymore; banks are pulling 4506-Ts on every file. I mention this because one issue that may come is for people that receive SS income. With SS income, some people do not claim it as income on their federal returns, because the IRS has a rule, that if you receive under a certain level; 25k for single, and 32k if married filing jointly, and 0 if you are married filing separately; then you do not have to claim it as income. You can use the Social Security Benefits Worksheet to calculate this and that form can found on the IRS.gov site. The worksheet can also be found on the back of the SSA-1099 form the receipt receives at the end of the year. If a bank pulls the borrowers taxes, and they do not see the SS income, please be prepared to document the reason why the SS income was not claimed. The income levels include the SS income and any other income they receive, including tax-exempt interest.

DC Metro Sr Mortgage Broker
Arlington VA Condos

Buying a condo...

If you are like many people, condos can be great first-homes. If you are buying a condo from an investment group or developer, please be careful. Some investment groups and/or developers want to use their own policies and documents that are different from what banks require. There are certain forms, especially on government loans that are mandatory from the bank and there underwriters. They need to be completed and signed by both parties. Some of these investors are asking for higher down payments that are required for FHA or VA loans, and are not concern with the underwriting process, only receiving their money. Please inquiry upfront what their minimum down payment is, along with closing cost help, and extension on settlements. If you run into these issues, the banks will not bend, they will expect for the buyer and seller to provide what is required or they will not lend on the purchase.

Georgetown Homes
DC Metro Sr. Mortgage Broker

HERA Law Update

Every bank is applying different twists to the new HERA law updates regarding the TIL (Truth-In-Lending) disclosure. The appraisal process is even more complicated now, not only do you have to wait to collect the fees, some banks are imposing a wait period to order the appraisal. You could be looking at close to a week before you can receive payment and/or order the appraisal. A few banks are requiring for an initial TIL to be disclosed and also a final TIL prior to closing. Some banks wait time on the initial TIL disclosure is 8 business days, with Saturday counting as one of those days. And once you receive a clear-to-close, they are imposing another 7 business wait for the final TIL disclosure. You must pick the date you would like to close and keep it, because any minor changes could result in a change to the APR, which would result in re-disclosure of the TIL documents and you could easily add another 7 business days to your closing date. If this sounds over-the-top and a pain, you are CORRECT! The government has gone from giving a loan to anyone with a pulse, to making extremely difficult for anyone to qualify and close in a timely manner. With all of these new laws and changes, you cannot realistically close in 30 days, and there will need to look at a 45 or 60 lock. What that does is, possibly increase your rate for the extend period to protect the rate. Now add on the nightmare problems HVCC (The appraisal law that is crippling the real estate industry), and you can see why when you combine all of these changes, it is becoming, nothing short of a nightmare to get adequate financing for good borrowers. And the government has the nerve to say they are trying to help people…WHAT A JOKE!! Ifyou are a realtor, please do not submit contracts with a 30 day settlement, you are taking a big risk. If you are a borrower, please be prepare to provide additional documents than before, and need to understand why rates can increase when they are locked for periods over 30 days.


DC Metro Area Mortgage Broker
Bethesda, MD Homes