First time home buyer - how to verify income

[1t2b]

Do you have to provide a full tax return? Or can you provide a W2 to verify income? We actually got an extension on this year's taxes but we're due a massive tax refund. We were going to apply for a mortgage next week, can we do that with W2s? Do they check your actual taxes?

[CreditCuriosity]

Tax returns.  No expert, but usually past two current years.  Not sure how extensions work someone else will pipe in on that part.  Also your mortgage broker should be able to answer that question as well.  Will have to sign a document giving them permission to pull your transcripts

[1t2b]

What are transcripts? What does that mean? So we don't give them the tax return? 

[CreditCuriosity]

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@1t2b wrote:

What are transcripts? What does that mean? So we don't give them the tax return? 

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w-2 won't work.  Alot like a w-2, but has dependendants and write-offs and other more personal information.  quick google search yields this.  

A tax transcript is a document provided by the IRS that summarizes your tax return. When you apply for a mortgage, we will request permission to obtain this document, and use it to verify the information reported on your return. The transcript must be reviewed by your loan officer before we can issue loan approval

[ShanetheMortgageMan]

Are you self-employed (Schedule C, S-Corp, Partnership) or are you a wage earner (W-2'd)?

If you are a wage earner then tax returns shouldn't be needed unless you own other real estate.  Self-employed individuals need to provide their tax returns, typically the last 2 years.  There are other alternative income verification options but they result in higher rates.

[1t2b]

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@ShanetheMortgageMan wrote:

Are you self-employed (Schedule C, S-Corp, Partnership) or are you a wage earner (W-2'd)?

If you are a wage earner then tax returns shouldn't be needed unless you own other real estate.  Self-employed individuals need to provide their tax returns, typically the last 2 years.  There are other alternative income verification options but they result in higher rates.

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I have a W2. Base salary (160k) + bonus/stocks (receive every year w/o fail and have for 7 yrs) brings me to 200K income, this is reported on the W2. Often it's higher than 200k. So do you think we wouldn't need more than w2 this way? I ask b/c this year we filed for an extension. I had no idea this house would be dropped into our laps so we didn't think anything of it. We're actually due a large refund this year and we owe some for state. So tonight I completed it on HR and we selected to have the tax pro go over it, which takes 3 days, then we'll efile. So I don't know what that would mean if we were required to show tax returns, especially as IRS seems to be moving super slow the past couple years.

[Creditplz]

Yep, W-2 but they'll require tax returns pulled directly from IRS, I gave a mortgage broker an amended tax return that I amended in person (drop off and stamped), and Carrington Mortgage accepted it. 

[ShanetheMortgageMan]

You should only have to supply W-2's & paystubs.  You might have to sign an IRS 4506t during the process but it'd be very uncommon for the lender to execute it prior to closing, usually it's just there as a fraud preventative measure (i.e. you default, then they execute it to make sure nothing fishy was going on).

[1t2b]

I'm not a dummy, but this whole process is making me feel like a dummy. I keep thinking I understand and know what to expect and then I'm WRONG 

[ShanetheMortgageMan]

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@1t2b wrote:

I'm not a dummy, but this whole process is making me feel like a dummy. I keep thinking I understand and know what to expect and then I'm WRONG 

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It's important to ask questions during the pre-approval process, it's not wise to assume.  Questions aren't a bother, they let the loan officer know of your knowledge level so they can tailor the level of communication needed for a smooth ride.  You can also gauge your loan officers knowledge by their answers, realizing they are really good at what they do or they are fumbling and you have a bumpy landing.  I go over about what to expect during the process, but I'll add extra details for those I feel need them or would like a more elaborate explanation.