I recently heard a very successful REI tell another newbie like myself at a REI club meeting to not provide all the bank/investment statements about how much money/assets/investments one has to a lender/bank for getting a loan. Only as much as is needed. He said something about “hiding” assets well in case of lawsuits etc. The mortgage lender I talked to wants 2 years tax returns and 2 months bank statements and investments statements? Should I provide all this info? What are the risks?
Absolutely not. Find another broker. I never show a tax form. I have no problem with business banks statements and I can get full doc loans.
mtnWiz – Why no tax forms? I am self employed and I have read on other threads that 2 years tax returns are normally asked for self employed people – is this incorrect?
What they ask for and what I give them are two different things. I run a lot of money in and out of my business account. I show them my business bank statements only and this is considered full documentation. Oftentimes, the deposits were tax-free cash from refis, not traditional income. Again, I NEVER provide my tax forms to anyone. Like I said, find another broker/lender. If you need help, just ask.
Doc is correct. In fact, if you run your business (any business) properly, your tax returns for the first few years in business should not show an income. Not exactly beneficial to getting a loan. This is besides the fact of giving people that you don’t know information about you that they shouldn’t be seeing.
And as Doc said, if your “income” is not traditional, then it doesn’t even show up on your tax return even if the lender is able to correctly read one (highly doubtful, btw).
The best way to get full doc loans without supplying tax returns is as Doc says, by providing bank statements. That is why it is very important to run ALL of your income through your business account and then write yourself a check if you need it. In fact, there are many lenders that use the income from bank statements only (don’t count withdrawals). You can use that to your advantage. Simply borrow funds, place in account, repay, repeat. You can build a “steady” stream of income into a business account this way.
Thanks Raj and Wiz. Does the same apply for W2 – don’t provide W2s? My business bank accounts are not real estate related so should I show personal bank statements? How about income – I still have to tell the lender annual income right?