Refinance-do you always have to prove income

Anonymous · ‎07-04-2015

I bought my car just 2 months ago. I'm financing through BBVA Compass at 5.99. After reading here about DCU, decided to apply for a refi, and was approved for 1.74. They asked for proof of income, which I provided. They did not want to accept my statements from Humana since I'm commissioned. BBVA didn't have a problem with that, I was surprised when they said they wanted my tax returns.

My question is do most banks ask for proof of income? or would it be mostly based on credit scores. I spoke to a CSR from a local credit union and she said they pulled Equifax and my score was 666. She said to get their best rate i would need a 680. Not sure if I should wait a few more months for my scores to go up.

Anonymous · ‎07-05-2015

@Anonymous wrote:
I bought my car just 2 months ago. I'm financing through BBVA Compass at 5.99. After reading here about DCU, decided to apply for a refi, and was approved for 1.74. They asked for proof of income, which I provided. They did not want to accept my statements from Humana since I'm commissioned. BBVA didn't have a problem with that, I was surprised when they said they wanted my tax returns.

My question is do most banks ask for proof of income? or would it be mostly based on credit scores. I spoke to a CSR from a local credit union and she said they pulled Equifax and my score was 666. She said to get their best rate i would need a 680. Not sure if I should wait a few more months for my scores to go up.

My recollection from my days of commissioned/self-employment income, often yes if they need to rely on that portion of income to get to the debt-to-income they want to see. For a W-2 employee, likely not. But when it's something that can vary, they want to see a history of that income, not just a one-time snapshot.

Anonymous · ‎07-05-2015

I work in finance (auto/personal loans) and we sometimes require to see paycheck stubs. It can be based on the fact that the lender knows nothing about you and wants to make sure the income you stated in the application is guaranteed income and not commissions or bonuses that are not guaranteed. It is usually a sign that your debt to income ratio is close to that bank's cutoff for declining you and they want to make sure you will be able to support the new debt with your regularly expected income. They are trying to keep you from going into too much debt and also protect themselves from lending to people who may run into issues paying the loan back.