The week of April 15th is tax week, and the dawn of tax refund special advertising. It’s funny how this week I can almost bet that you see a furniture commercial advertising they will pay your sales tax, or perhaps a car dealership will match your down payment if you use your tax refund with them. There are a ton of marketing spins to this during this the week of April 15th. Rightfully so too, and great advertising. Taxes owed and filing have a big impact on certain financing. Such as a home.
What does this mean when buying a big ticket item like a house? Well with Fannie and Freddie conventional loans having to owe taxes is not necessarily grounds for disqualifying you from buying a house. If you owe taxes this year set up a payment plan, and once approved make a payment or two. Now Fannie and Freddie do not say you need to make a payment, but FHA does. FHA now says you have to have a payment agreement and pay 3 months of that agreement to be eligible.
What if I owe back taxes or have an IRS lien? Yes you still need to have an agreement in place for FHA and three months payments made on it. If you are attempting to do a conventional loan then you will be stuck having to pay off the back taxes if they are a true tax lien. If they do not have a lien yet, but they owe back taxes that client should definitely be able to show an agreement and a payment history on that previous years taxes at this point.
What happens if I don’t close my loan on April 15th? Well the clients’ should have transcripts from the IRS showing they filed taxes hopefully. IF NOT, an extension is ok to have in the file now. From April 15th to Oct 15th is the window in which any file can close using the previous two years taxes as verification if a tax extension was filed by an individual. During that time you just have to have a copy of the filed extension in the file.
What if they just Filed taxes this weekend (week of April 15th) for example, how soon can we close? Great question if the wage earner on the loan is in fact W2’d and income is not more than 25% commission, we can do a W2 Validation only loan. The transcripts we get back as lenders is verification of the employer filing the W2 not the client. So we wouldn’t have any down time. If the client was paid all commissions or self employed and just files this week, well then your probably going to end up waiting a month or two… I only say that because the transcript results of someone verifying a clients filed taxes come based on the IRS turn time of getting them in that system. And on the busiest week of the year for the IRS, the odds that it’s just going to take 3-4 weeks will be slimmer. I’ve always experienced a surge in turn time being a lot longer for those that need transcripts in a loan but they just filed at the week of April 15th. Try like 6-8 weeks out for them to show up. Plan accordingly.
Sell Well – JUICEMAN