Simple home buying steps to take to get your taxes in order!
Before buying a home or refinancing your home it is important to have your financial documents ready. Your tax return being the most important along with your bank statements, paystubs, w-2 forms to name a few of the documents you may need. The lender’s underwriter is ultimately looking to determine if you can afford the loan now but also for years to come. To determine this a lender has to determine your debt to income (DTI) ratio and trends over a period of time by reviewing your tax returns from the IRS.
If you earn revenue from a business, earn contract or self-employment income a lender will likely ask for you to provide: 1099 form for the past year, this form records the money paid to you from an entity or person. K-1 forms are requested if you own part of an S-corp or Partnership. This document reports each partner of the business share of their losses, earnings, deductions, and credits. Personal and business tax returns for the past 2 years, and a schedule C form to understand the business year to date profit and loss.
This small start could save you tons of time!
This is a good start to get the home finance process started, which is why it is so important to have your taxes done and ready to avoid delays. It is also recommended that you speak with the lender to understand how exactly they will underwrite your loan, and any additional forms that may be requested. Depending on your financial situation more documents may or may not be requested to determine your DTI ratio and to see your financial trends. If you want to get your tax returns done early and need help preparing your tax returns, schedule a call to talk with us to clarify these questions.
*This article is created to provide general information. It is not intended to provide or relied upon for advice
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