Why do underwriters need tax returns?

Why do underwriters need tax returns?

If you’re in the process of applying for a mortgage, it’s likely you’ve been providing the underwriter with lots of documents. Mortgage companies typically ask for pay stubs, legal documents, and bank statements to verify your financial well-being. The mortgage underwriters may want more information in situations where you’re self-employed or if you can’t prove your income in a traditional manner.

Why Is My Lender Asking For Tax Transcripts?

You may have already provided your loan company with a stack of documents including your income tax returns. Unfortunately, the underwriter can hold up your mortgage by asking for even more documentation. It’s common for loan companies to ask for your tax transcripts. These are often used to cross-reference with your tax return to verify your income information. Underwriters prefer to use tax transcripts for this process because they are sent directly from the Internal Revenu Service (IRS). There’s no possibility of fraud or altered information because it comes from a bonafide agency.

What Will My Tax Transcript Show The Lender?

Your tax transcript is a line item document with the information necessary to verify your income tax filing. It will show the information that’s relevant to your underwriter when it comes to proving your income. The underwriter may want the past two or three years of your tax transcripts in order to approve your loan.

How Do I Get My Tax Transcripts?