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Old 03-29-2015, 09:41 PM
 
3 posts, read 3,807 times
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Quote:
Originally Posted by Hemlock140 View Post
Tax refunds are not income they are overpayment of taxes on income the previous year, and would not be considered as part of one's income/expense ratio for a mortgage. Mortgage qualification requires verifiable income, so cash business money that people hide from the IRS/state won't help. They will be only considering the $29,000, so with $7,000 down I would expect the OP to qualify for a maximum mortgage payment of about $800/month, at 4% interest about a $150k house.
Hi Hemlock140. This is not cash business money. I don't own any business. This is part of my income withheld by my employer/IRS and then returned to me.

As Narmowen explains right before you, I'm not looking for a $200,000 mortgage. I'm just making clear that I have enough cash on hand to pay a FHA down payment.

You already gave an idea of how much I can apply for, thank you. I'm currently paying $1000/month in rent, so I can afford $800 mortgage.
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Old 03-30-2015, 05:21 AM
 
Location: Ozark Mountains Arkansas
1,795 posts, read 1,107,269 times
Reputation: 3566
Quote:
Originally Posted by bosterou View Post
Hi Hemlock140. This is not cash business money. I don't own any business. This is part of my income withheld by my employer/IRS and then returned to me.
Yes, that's right, but the income is already counted in the $29,000/year since it is counted pre-tax, so the refund being counted would be like counting the income twice.
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Old 03-30-2015, 12:18 PM
 
7,672 posts, read 9,342,441 times
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Quote:
Originally Posted by bosterou View Post
Hi Hemlock140. This is not cash business money. I don't own any business. This is part of my income withheld by my employer/IRS and then returned to me.

As Narmowen explains right before you, I'm not looking for a $200,000 mortgage. I'm just making clear that I have enough cash on hand to pay a FHA down payment.

You already gave an idea of how much I can apply for, thank you. I'm currently paying $1000/month in rent, so I can afford $800 mortgage.
So your W2 form shows $29000.00 annually? That's before any deductions to the IRS.

So that "refund" is just your income given back to you. The $29000 already includes it.
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Old 03-30-2015, 01:01 PM
 
Location: Phoenix, AZ > Raleigh, NC
14,320 posts, read 17,531,665 times
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Quote:
Originally Posted by bosterou View Post
Hi haudi. That's my point. This refund is part of my income, that was withheld by my employer/IRS during a year, then returned to me when I file taxes. As AmFest points out right after you, I should fix this issue on my W-4, but that won't change my numbers until next year.
You should fix this issue IMMEDIATELY. Why on earth would you give the IRS a $12,000 a year loan????
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Old 03-30-2015, 01:23 PM
 
7,672 posts, read 9,342,441 times
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Quote:
Originally Posted by Jkgourmet View Post
You should fix this issue IMMEDIATELY. Why on earth would you give the IRS a $12,000 a year loan????
For some reason people just don't know that they can have this changed or worse, they like having a refund. I don't get it either.
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Old 03-30-2015, 02:07 PM
 
Location: Boise, ID
8,013 posts, read 22,537,670 times
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This would be an increase in your NET income, but not an increase in your GROSS. Gross is pretax, so if you overpaid your taxes and got a refund, that does not affect the amount of the gross income. It would be an increase in your net income, but that is not typically what the lenders are looking at.
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Old 03-31-2015, 10:15 AM
 
82 posts, read 112,890 times
Reputation: 209
Quote:
Originally Posted by bosterou View Post
I'm currently paying $1000/month in rent, so I can afford $800 mortgage.
So, you gross $29,000, and have at least $12,000 a year taken out in taxes? Then pay another $12,000 annually in rent? That leaves you with only $5,000 annually to live on until you receive your refund?
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Old 03-31-2015, 03:16 PM
 
2,303 posts, read 2,125,777 times
Reputation: 3827
Calling a Tax Refund "Income" is only correct if you consider getting $5 in change from a $20 bill to mean you earned $25.

Your refund is nothing more than the change from your taxes. Sure, some people may get credits, but those still aren't considered income for loan purposes.

Your gross income is the $29k. That's the only number that matters.
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Old 03-31-2015, 05:19 PM
 
Location: Living on the Coast in Oxnard CA
15,372 posts, read 25,601,247 times
Reputation: 19649
I guess you could check out one of those home loan calculators to see what you can afford.

I checked one on Zillow and with $29,000 in gross income, no debt of any kind, and $7,000 down payment you can afford a home loan of $131,184.

That does not include HOA fees if your home is in an association. In my area you would not find a home of anykind at that price.
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Old 04-17-2015, 07:12 AM
 
Location: Earth, a nice neighborhood in the Milky Way
2,374 posts, read 1,438,197 times
Reputation: 995
Quote:
Originally Posted by bosterou View Post
Hi Hemlock140. This is not cash business money. I don't own any business. This is part of my income withheld by my employer/IRS and then returned to me.

As Narmowen explains right before you, I'm not looking for a $200,000 mortgage. I'm just making clear that I have enough cash on hand to pay a FHA down payment.

You already gave an idea of how much I can apply for, thank you. I'm currently paying $1000/month in rent, so I can afford $800 mortgage.
A tax refund is not earned income. However, if you were someone who itemized their deductions (I suspect not), your state or local income tax refunds are counted as income the following year by the feds.

I wouldn't be so quick to assume that just because your mortgage payment will be $200 less per month than your present rent, that you can afford home ownership. There are lots of other costs to factor in: taxes, insurance, water, sewer, garbage, gas, electricity (if any of these are included in your rent you may not have visibility to how much they are), and maintenance/repair come to mind. These costs add up quickly. You do get some relief via deductions on your federal taxes for property tax and mortgage interest, but it's not dollar for dollar.

Last edited by ormari; 04-17-2015 at 07:28 AM..
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