Potential Delays in Closing During Tax Season
Delays in Closing During Tax Season
With tax season in full swing, many borrowers are working to collect, organize, and file their 2016 tax returns. Tax season is an important time in the mortgage industry. This is because final tax information must be received before final loan approval. Here are some potential delays in closing during tax season:
After April 18, 2017, the previous year’s tax returns are required. Lenders must have a copy of borrowers’ transcripts or their filed extension in order to close their loan.
The closer we get to the tax deadline, the slower requests are returned by the IRS because of the high demand. This can delay closing for those borrowers that do not keep records of their taxes, or are filing their taxes too close to their closing date.
Requesting Previous Tax Returns
During this tax season, many home closings are subject to delay. The delay is because clients may not have their most recent tax returns on file. As shown in PRM’s Do’s and Don’ts of the mortgage process, to qualify a client’s income for a mortgage, two years’ tax returns are required and transcripts must be verified by the lender through the IRS.
To get tax returns from the IRS electronically or by mail, click here. Requesting the previous years’ tax returns electronically will help speed up the process. This will also allow for a smoother closing when the client is purchasing a home this season.
Filing electronic tax returns with the IRS may be able to help your clients accelerate the documentation process considerably when buying a home in 2017. For buyers hoping to use their 2016 income to qualify, filing their taxes electronically allows lenders to verify their transcripts much sooner; qualifying them with their most recent income.
If you are actively looking for homes, we can figure out if your latest tax returns will be required to qualify. We are happy to help our referral partners proactively. We would also love to help educate clients on the timeline of the loan process.
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