November 2019
Get Started
What Do Your Tax Docs Tell Lenders? Back to blog
Thinking of Re몭nancing? Before a Mortgage Lender will issue you a Mortgage Loan, they need to get an idea of what you can afford. One of the most telling ways for a Lender to get a glimpse of your affordability is by going over the last year or two (depending on the employment or loan type) of Tax Returns as well as other requested Financial Documents (These may include bank statements, pay stubs and other various documents.); This is otherwise known as the “2 Year Threshold”. Mortgage Lenders will be looking over your debt-to-income ratio (DTI). The equation is as follows: Monthly Debt Payments (Including Future Monthly Mortgage Payments, Taxes, Insurance, and Mortgage Insurance) ÷ Monthly Income (Before Taxes) = Your Debt-toIncome Ratio (DTI) The lower your Debt-to-Income, the greater chances you have at Re몭nancing. Why do Lenders need my tax returns? Tax Returns can give Mortgage Lenders an idea of your income history; whether or not you have a steady & stable stream of incoming 몭owing-in and how much you make can determine how much home you can afford. Also, showing