Home Buying in 07013>Question Details

amc_212, Home Buyer in Clifton, NJ

Is it normal for the a bank to ask for a copy of your income tax from two previous years in order to give you a pre-qualification letter?

Asked by amc_212, Clifton, NJ Mon Apr 15, 2013

I thought copies of my paycheck would be appropriate.

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yes.....it is. Everyone should know that it is.
0 votes Thank Flag Link Sat May 18, 2013
Yes, it is completely normal. A couple of pay checks do not provide adequate information.
0 votes Thank Flag Link Fri Apr 19, 2013
That's not uncommon. Paystubs and Bank Statements are also asked for typically. The process has gotten a little more lengthy and thorough, but at the end of the day it protects them as well as you, so it's for the best even if it can seem intrusive or inconvenient.
0 votes Thank Flag Link Fri Apr 19, 2013
I am from the mortgage side. It is common, when they underwrite the file they might need last year or two years tax returns. That is based on the DU Findings. That should be run first i think. They are probably just very thorough. if you need 2nd opinion don't hesitate to contact me.

Michael Diaz
0 votes Thank Flag Link Fri Apr 19, 2013
Yes this is normal. Banks have become strict with their lending qualifications and underwriting.

Laquita Baez
Weichert Realtors
0 votes Thank Flag Link Fri Apr 19, 2013
It may seem like overkill but many banks have gotten tougher and more cautious on prequal letters because of the current complexity of the mortgage process.

There are so many issues that can come up during the process and banks are not willing to issue a letter and have a potential buyer sign on a home when ultimately they won't qualify for a mortgage.

Not all lenders will require tax returns for a prequal-in fact, many won't-but that doesn't mean it isn't normal.
0 votes Thank Flag Link Tue Apr 16, 2013
Contrary to what the RE Agent stated below. It isn't Unfortunate. What is unfortunate, is all the people who lost their homes during the housing meltdown as a result of not having to document their income when they applied for a home loans. If you have not applied for a loan in the past 3-5 years, I can tell you for certain, it's not at all like it was pre-2008. In order for me as a Loan Officer to correctly calculate your income, I am generally required to income average you for the past 24 months and without tax returns my job would be nearly impossible.

Main reason... it depends on how you file your taxes. Are you self-employed where you write off a large percentage of your income? Are you in sales and you file an IRS Form 2106 un-reimbursed expenses, or do you have short term capital gains? The truth is most buyers have no idea what their AGI (adjusted gross income) actually shows. That's my job as an LO to be part CPA, part Underwriter and part Detective. We have to spot any possible problems in advance so you don't the 11th hour squeeze. Those are the facts my friend. If you'd like some further information, please feel free to contact me.

Best of Luck!
Web Reference: http://www.AFN-Loans.com
0 votes Thank Flag Link Mon Apr 15, 2013
Unfortunately, at this time, this is a normal request. The reaction to the no doc loan days and the crisis that followed has been very tight credit standards. If you want to buy at bargain prices and super low mortgage rates, you will have to put up with some requests from the mortgage companies that may seem excessive, but may be necessary to get your loan. Don't get discouraged, go along for now. You won't regret it a few years from now.
0 votes Thank Flag Link Mon Apr 15, 2013
The combination of the Housing Crisis and the Patriot Act have made the process of Buying and getting a loan, more intense.

The Banks are working for the Government in that they want to identify Money Launderers.
The Banks are working for themselves in that they don't want to repeat their past mistakes.

Don't look at it as baring your soul: look at it as you-have-no-choice!
0 votes Thank Flag Link Mon Apr 15, 2013
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