IRS Form 4506 T is entitled Request for Transcript of Tax Return. This form is a may be used to evaluate a borrowers creditworthiness to obtain any type of loan but it is used mainly for any kind of mortgage loan. It is used to a transcript summary of an individual’s tax information to verify the income stated on the loan application made to qualify for the loan.

Lenders use the form for “Quality Control”, to verify income of the “self-employed” and to detect fraud. Many lenders do a quality control check on the mortgage files they receive every day–mostly it is decided that a certain number of files a day (like every 4th file received)or any file from a “new” broker/loan officer will be thoroughly checked by the mortgage company/bank. After the file is underwritten, the file will be given to another person who will verify everything in the file. Every person who has signed any kind of verification forms will be called again to verify that he/she did write and sign that paper. Every checking or savings or asset letter will be re-verified and so will the income. If your 1040’s & w2s or 1099s were included in the file, the 4506T is used to request a quick print-out which summarizes your tax returns looked like for the year/s you have provided. This summary transcript verifies the paperwork given to the lender.

This quality control and 4506T should stop any fraudulent loans from happening. If the IRS transcript shows less income than the the income represented on the loan application, then the lender can either stop the mortgage process and deny the loan or if the loan is already in place, the applicant can be asked to payoff the mortgage/loan immediately due to apparent fraud. “Legal action” can be taken, it depends on the lender and/or the state (if they become involved)as to what action will be taken against the customer, the broker/loan officer and/or both if involved.

@IRSTax

Points for the mortgage. They should be on the 1098 you received from the lender, though, so don’t add them if they were.

Property taxes credited to the seller are considered as paid by you and should be added to any other property taxes you paid in the year of closing. Property taxes credited to you are considered paid by the seller and should be subtracted from any property taxes you pay in the year of closing.

Prepaids (other than mortgage interest, which will show up on the 1098) have no tax consequences, they are just deposits towards future bills.

All other closing costs on your side of the HUD-1 can be added to your basis for the home. This will reduce your gain on sale when you eventually do sell.

@IRSTax

First, mortgage interest on loans up to $1 million is completely deductible for the year in which you pay it to buy, build or improve your principal residence plus a second home. You can also deduct points you pay to refinance your home – over the life of the loan. You can deduct points paid when you purchase your home in the year paid, no matter who pays them, the buyer or the seller.

When you sell your home, you probably won’t need to worry about capital gains taxes if you own and live in your home at least two years. The exclusion has been raised to $500,000 for married couples and $250,000 for single owners.For more information, see Publication 523, Selling Your Home, on the IRS Web site.

@IRSTax

Rates for 30-year U.S. mortgages held at the lowest level on record as fewer Americans sought loans to buy homes.

The average rate for a 30-year fixed loan was unchanged in the week ended today at 3.87 percent, the lowest in records dating to 1971 and the third straight week at that level, Freddie Mac (FMCC) said in a statement. The average 15-year rate remained at 3.16 percent, according to the McLean, Virginia- based mortgage-finance company.

“Rates have moved very little now for the last couple of months,” Keith Gumbinger, vice president of HSH.com, a loan- data company in Pompton Plains, New Jersey, said in an interview yesterday. “Rates are at fantastic levels.”

Low borrowing costs have done little to spark consumer interest in buying houses. Financing applications for purchases have fallen in three of the past four weeks, according to data from the Washington-based Mortgage Bankers Association. The group’s purchase index declined 8.4 percent in the period ended Feb. 10, while its refinancing gauge rose 0.8 percent.

Bloomberg

@IRSTax