Getting qualified for a mortgage is not difficult if we can verify income, assets and credit. However if you are self employed, it always seems to be a little more difficult!! Almost all lenders are now requiring a 4506T (IRS form that allows lenders to verify the income tax information that you gave the lender is the same information that you filed with the IRS). In the past, it was very common for lenders to require the 4506T, but very few actually pulled the returns from the IRS. Now just about every file will have the income documentation compared with what you have filed with the IRS.
If you are self employed, make sure you keep your tax returns. We will require at least two years of complete federal returns and you need to have a two year history of being self employed. Now many lenders are also requiring that we verify your employment verbally. What that means is that we need to be able to verify your company with a third party (CPA, regulatory agency, licensing bureau) within 30 days of closing and we also have to be able to verify the existence of the business by verifying a telephone listing and address through the phone book, internet or directory assistance.
If your business is small and you don't have a phone listing, we will work with you to see what else we can use. It may be invoices with a company name and address, copies of checks written to your business, etc. If you have an internet site that you use to advertise, we may be able to use that.
For those that are employed by a company and receive w-2's, don't be surprised if your lender also requires a 4506T and actually pulls the information from the IRS. It is happening more often to avoid fraud in all situations. If you are married and only one person is qualifying for the mortgage due to a self employed spouse, expect that you will have to explain any loss of income due to self employment. The underwriter may also use that loss in calculating your income and reduce it by the loss – which could affect what you will qualify for in a mortgage.
Be upfront with your loan officer and make sure they know what is going on. If you explain your income in the beginning, it will make your mortgage loan process a lot easier! Unfortuantely, it is just one area that has become a little more difficult over the last year!!
