What Borrowers Should Know About A 4506-T

What Borrowers Should Know About A 4506-T

If you’re applying for a mortgage or other loan, your lender may ask you to sign an IRS Form 4506-T. This form allows the lender to request your tax transcripts directly from the IRS for the last three years. A tax transcript is a summary of the information you provided on your return such as your income and deductions.

Many people are understandably concerned about signing this document. Allowing someone to review your tax information gives them access to a lot of personal information. You have no legal obligation to sign a Form 4506-T and can refuse to do so. However, your lender has the right to require you to sign the form as a condition of your loan application. If you don’t sign the form, they can deny your application.

The reason lenders ask for this form is to prevent fraud. Loan applicants may lie about their income on their application. In some cases, they may even go as far as to fake pay stubs or tax returns. A Form 4506-T allows the lender to see what you really filed with the IRS to remove any doubt about the information you gave.

You should also be aware that falsifying a mortgage application may constitute mortgage fraud. If you lie about your income, the lender may decide to refer you to federal prosecutors. Of course, mistakes and misunderstandings can also happen. For example, you might provide your income before deductions, while the lender wants your adjusted gross income. As long as there is a reasonable explanation with no intent to deceive, your lender will work with you to correct your application.

Similarly, a Form 4506-T can raise red flags with the IRS. If you haven’t filed your tax returns, the IRS may wonder why someone is asking to see them. They may decide to conduct an audit, and if they find unreported income, they could charge you with tax evasion.

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How Long Does it Take to Process a Mortgage Loan?

How Long Does it Take to Process a Mortgage Loan

Thinking about applying for a mortgage? If so, you may be wondering how long the process actually takes, from beginning to end. While the length of time may vary based on the extenuating factors of your case, there are some general guidelines to keep in mind as you enter this new and exciting phase.

Understanding the Process

There are several steps involved in obtaining a mortgage: the pre-approval process, the appraisal of the property in question, and the processing of the actual loan. Here, we’ll talk you through each of these points to help you understand what’s involved.

Before you start actively searching for a home, it’s important to know how much you can potentially spend. That’s why you should visit your local bank to get pre-approved before signing with a real estate agent. The lender will check your credit history, debt-to-income ratio, and other factors to decide how much you can credibly borrow. Bear in mind that this pre-approval can also be recognized by other banks–you don’t have to borrow from the same one that gave you the rating.

Once you’ve made an offer on a home and it’s been accepted by the seller, an appraiser will have to come in to ensure that the property is worth what’s being paid. During this time, an underwriter will be looking over the details of your mortgage, checking for any holes and discrepancies.

If all the pieces come together, closing day is the day you receive the actual loan. You’ll meet with a lawyer, the mortgage officer, and the real estate professionals to sign the final paperwork and obtain the keys to your new home.

The Bottom Line
The length of time from the pre-approval to closing day is usually two to three months, but there’s always a slight risk of delay. This is why it’s important to get started as soon as possible if time is an important factor.

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What is a 4506t?

What is a 4506t?

Form 4506t is a Federal tax form commonly referred to as the Tax Transcript form. This common form is used to:

  • Request a personal tax return copy
  • Designate a third party to receive a personal tax return copy

Form 4506t researches (2) years of past Federal tax returns on file. There are many occasions that require Form 4506t use. Mortgage loan borrowers are required to submit a completed and signed Form during the mortgage loan application process. Why? Lenders need to verify past tax returns to discover financial eligibility. In this case, the lender is the 3rd party receiving copies of personal tax returns. Buyer beware in the case of any false tax returns. In this case, the mortgage lender would alert the IRS of any tax return discrepancies.

Form Receipt Time

IRS’s return processing takes from 2-4 weeks before a tax transcript becomes available. If the citizen filed through electronic means. IRS processing takes approximately 6 weeks if the tax return was filed through the mail system.

Form Price

The IRS charges $2.25 for each Form 4506 process, and lenders usually include this cost within their processing fees.

Pitfalls to Avoid

Taxpayers can avoid Form 4506 pitfalls, particularly the chance that the IRS may reject the form, with valuable information. The IRS will not process (or reject) the Form if the address on the Form doesn’t match the address listed for the tax year requested. Pay close attention to Line 4 of the 4506 Form, and make sure the addresses are exact. If the IRS cannot read a clear signature or other handwriting on the form, the form will be rejected as well.

Obviously, legal and true federal tax returns avoid IRS penalty. A false tax return will trigger an inaccurate Form 4506 transcript, and discrepancies will be visible. The taxpayer certainly does not want to generate IRS trouble. So, file true tax returns as a rule of thumb.

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What is an SSA 89 form used for?

What is an SSA 89 form used for

The SSA 89 form is an authorization for the Social Security Administration to release your social security information. It authorizes the administration to verify whether or not your name and the social security number you provide to a lender match the information that is in their records. The results of the matching can then be sent to the person or company requesting it.

A lender may use an SSA 89 form in order to prevent identity fraud. Filling out this form is not a requirement to get a loan at all lenders. The government does not require lenders to complete this verification.

The SSA 89 form must be completed by a person who wants to borrow money. It requires a signature and date in addition to the other required information. Lenders can prepare pre-printed sheets with their details. It is the borrower’s responsibility to give the completed form to the lender. Upon receipt, lenders use the consent-based social security number verification service to get the confirmation of matching information.

The government checks the borrower’s social security number, name, date of birth and gender code and returns a “yes” or “no” to whether or not there is a match in the Social Security Administration’s database. Lenders pay an enrollment fee and transaction fee to use the government’s database.

Lenders have the responsibility to make sure that the information they submit matches the information completed by the borrower. If the search turns up any areas that do not match, the lender has the responsibility to investigate. For example, a name mismatch might be due to two transposed letters. It is possible that a person changed their last name for everyday use, but the person might have forgotten to make the name change with the Social Security Administration.

A non-match in the result could also be due to identity theft. An identity thief might not actually know the borrower’s current address or correct date of birth.

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