Pre-Approval - Tax returns vs. Tax transcripts

[Anonymous]

Curious if there is a difference when getting pre-approved. I see where the last 2 years of Tax returns with all schedules and pages are requested. If I have the transcripts for the last 2 years will that be OK or do I need to send exactly the 2 returns with all schedules and pages?

[kc0039]

Depends on the lender and the comfortability of the underwriter underwriting your loan. I had one where we got the transcripts, BUT the letter has to be opened in front of the processor to ensure that nothing was tampered.

[Threeof5]

My underwriter will usually condition for tax transcripts if the borrower is self-employed, especially if they use one company as a passthrough, and then W-2 themselves. It's another way of verifying income.

A word of caution. If your LO does have you fill out a 4506-T form (the tax transcript request), make sure it is PRECISELY correct. They take five days on average to process and if so much as a "Ln" or "Ave" is out of place, gets it rejected and you have to start all over again. Yes, it drives the LO, and the borrowers, crazy.

[ShanetheMortgageMan]

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@Anonymous wrote:

Curious if there is a difference when getting pre-approved. I see where the last 2 years of Tax returns with all schedules and pages are requested. If I have the transcripts for the last 2 years will that be OK or do I need to send exactly the 2 returns with all schedules and pages?

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Sometimes transcripts can be used in lieu of tax returns.  Just depends on how complicated the returns are.  I had a client who only had their transcripts, I was happy to review them (we'll order our own to verify of course) but it was a complex transcript with Schedule C's & E's and so it was impossible to decipher without the actual return... in that situation, returns were needed.