When it comes to my mortgage, can I pay more than my required monthly payment?

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I live in Canada (so any advice, please consider Canadian law), and I am pretty naive when it comes to mortgages and the details behind payments and “prepayments”. (Not even sure I understand that term accurately.)

I’m wondering if I have a mortgage (more specifically a fixed-rate), and I have a set monthly payment, if I can pay more than my monthly payment without making a permanent commitment to that increased payment. (For example, throw my tax return towards my mortgage debt.) And, if it doesn’t effect that, what are the penalties surrounding paying off your loan early? Any websites that explain this in relation to Canada law would greatly be appreciated or perhaps someone who is an investor that lends or is a mortgage broker for a living.

Thank you in advance!

Im a first time home buyer. I am a otr driver. I am out working 355 days a year. I take 1 week off to visit family back home.

The dept of transportation allows me to deduct from taxable income a flat rate of 45? dollars for everyday im out on the road..away from my home state.

I claimed about 37.00 a day..itemized on my return.
I also have other deductions to my taxable income.

The issue is.. my mortgage broker is stating that the underwriter is making me show my tax returns for 07 an 08 to see IF i qualify for a home loan.

I made 53k , i had 20 k in deductions. I couldve taken more but thats a gray area , recpts etc.. anyway..

i am NOT a self employed person.. i have w2s. I applied to the underwriter , got approved for 72k.

I negotiated the purchase price, and such.. got my loan down to 56k & seller contribution of 2k, add in an 8k rehab loan, brings my tally to 64k, add in 12k closing etc.

bottom line. my mortgage guy locked me a rate at 5.5 fixed 30 etc. amaZing..its till the 1st of march..

Our closing goal is the 20th of feb.. as i said i had a preapproval.. i signed a contract , (theres alot more details about the contract).. paid for inspection, and appraisal. now mortgage guy TIM.says he put off ordering the survey as i may not qualify now..

I ask why am i being forced to show tax returns, just because my occupation is trucker?.. if i made 53k a year and say paid rent equal to my truck pmt.. 652 , and ,my util budget is 232 a month.

I make around 4144 a month. I gotta eat, like eveyone else..only i get a tax break on daily expenses.. meals etc.

My mortgager lied to me saying an appraisal had been ordered when it has not ..that was 9 days ago.. now i found out that the realtor.. MY realtor stated ..c.mort group has ordered the appraisal, then see hand writen
order but am told by morgage co. that it wasnt ordered.

everyone else whos not a *truck driver..gets to take w2s to fha and show bills etc, get a loan.

but for I .. i am required to show all my tax return even tho i am not self employed and i get most of my tax pmts back by itemizing.. well the house sits and i am left with 725 spent for inspection and appraisal and now even tho i had a prequal letter, a signed contract and 30 days into the process.. my mortger says i dont qualify..

is there a way around this. thru it..etc
The purpose of buying a home now is the market, my age and family needs.

I plan to be home more and my work is slowing down a bit.

Ive been a driver for 7 years. didnt want or need a home, stayed out on the road.
cheaper. independant

now.. my family has no housing.. i have the ability to have a full house again.
and yes..tax deductions.. equal amounts better investment..
the reason the underwriter is asking for
the returns…because i stated truck driver as job.

i also wonder..could it be also because im female?

if only my ahem.experienced mortgage broker listed me as

freight engineer
or relocation specialist
or professional commodity relocator..?

im just barely at the qualifying line. as Tim says.
hes asking if some of my *depreciation? can be added back.. like half my meal per diem deductions.

im 130 lbs 5.5 , healthy.. i do not eat 45 dollars of food a day. lol. but i am allowed to deduct it.

im wondering what would happen if i ammended my return , gave back the piddly 2k i got in refund pay taxes..lol

thanks for the support.. i really appreciate someone elses view of this
i am not self employed. thanks for the confirmations on the tax return question. as for being a tax evaider. ha. not.

i worked 355 days this year. worked holidays and also a team driver. yeah it cost me 20000 to make 53.

oh btw.. i redid what my taxes wouldve been if i claimed only 8000 in perdiem for the year.. i would only owe 350 over what i PAID..bummer.. guess i could ammend my return. NOT.

my net income is 29k after redoing the taxes. i would have to give back 2005.00 and another 350. this is being considered. i have time to get more capital. im actually 2 weeks ahead of schedule as per the contract. but..i would rather have the writer make the adjustment on thier end. less paperwork. and i dont want to give up 2k. i do have till april. spose i could sell my soul to irs and take the buyers credit. use the money to tidy up my ammended return? whatever..

8 Comments
  1. Reply
    ladystang
    January 30, 2011 at 7:41 pm

    i always put extra to pay on principle on my mortgage. but make sure to make it is for principle.

  2. Reply
    Judy
    January 30, 2011 at 7:50 pm

    If you have a normal mortgage – there most probably won’t be any penalties.
    Its the ARM mortgages and option and all the other scam mortgages that you get fees.

    One thing I would do, is write separate checks.
    I would write one – regular payment. On the other check – payment towards principal (on the memo part).
    Make sure that when you get your statement – that it was applied to the principal and not tacked on to the end of the loan.
    I would call the mtg company just to make sure.

    NOTE::::
    Do not do this unless you have at least 6 months worth of living expenses in a savings.
    Be sure you are putting into your 401K, at least the company match.

    Make it your goal not to have a mortgage by the time your kids go to college.
    This is a great way to “hide” money from the FAFSA and get your kids the most grants as possible.
    Only taxable accounts are counted in the FAFSA – so start hiding money in mortgages, 401Ks, ROTH’s or tax–deductible IRA’s – pay off all your debts by the time your kids are 16.
    Google EFC calculator – expected family contribution
    You’ll get a better understanding of what I’m talking about.
    Even if you don’t get the grants – you’ll get all the student loans you need at super low interest rates. Hopefully you will pay their loans for them
    /

  3. Reply
    Andrew
    January 30, 2011 at 8:46 pm

    Your individual mortgage has the answer. If there is no penalty for paying it off early then pay extra toward prinicple each month. If there is then do not make extra payments. That simple.

  4. Reply
    Computer Guy
    January 30, 2011 at 9:28 pm

    Canada or USA, it all depends on the fine print in your mortgage application. Some mortgages have a pre-payment penalty built in. I think it is rare, but you bank can tell you. By the way if you have other interest bearing debt at higher rates than your mortgage, you might want to do that first.

    Grandpa

  5. Reply
    estielmo
    January 30, 2011 at 10:18 pm

    Tax returns are considered proof-positive of your net income.

    My question would be why are you buying a house if you’ll never be there?

  6. Reply
    A D
    January 30, 2011 at 10:29 pm

    I realize it’s a hassle, but it is not unusual to have to show 2 years worth of tax returns. Even if you are not technically self-employed, you are itemizing expenses in a way that many self-employed people do. Don’t take it personally, this is business.

    I imagine that the lender is in a CYA mode. Did you go to a mortgage broker for pre-qualification? It is possible that now the broker has placed you with a specific lender who will actually be making the loan to you and the lender’s underwriter is requiring more documentation.

    A letter of pre-qualification is really not a binding agreement by the lender.

    Good luck.

  7. Reply
    Lisa L
    January 30, 2011 at 10:36 pm

    I have never done a mortgage for an OTR truck driver that I didn’t need 2 years of tax returns. You answered your question. You made $ 53,000 but wrote off $ 20,000. Your income is $ 33,000 unless there is depreciation to add back in.

    Commissioned sales people are the same. Must have tax returns. What is legal in IRS’ eyes does not help you when buying a home. You are saying it cost you 20000 to make 53000.

  8. Reply
    Expert Realtor
    January 30, 2011 at 10:41 pm

    Your post contained quite a bit of information that is not relevant to your situation, here is the deal.

    When you are self employed, the IRS says that you have to claim ALL money (that is every single penny that you get paid)…you don’t get to pick and choose what wages you claim..no one else that gets paid by the hour gets to do that…you don’t get that right just b/c you get paid in cash or via 1099.

    THEN the IRS allows you to make reasonable deductions for gas, meals, hotel, and other legitimate business expenses…what is LEFT is considered your INCOME for income purposes.

    THAT figure is what underwriters use to determine what you can afford.

    If you are self employed as a trucker, you need to have a minimum of 2 years of FILED tax returns in order to prove your income.

    If you have not done this, or “wrote off” everything you legally can to where you show very little or not income, then you won’t qualify for a loan.

    If that doesn’t seem fair…it actually is…if you are not claiming proper taxes that is what they call tax evasion…and the mortgage company will not assist you in that process.

    You MUST show tax returns because self-employed borrowers have a tendency to lie about their income or hide it or not claim it.

    You are not being discriminated against b/c you are a trucker, you are being asked to prove that you are not committing tax evasion…and if you were not…then you wouldn’t have a problem with it.

    It doesn’t matter which bank you go to…THEY ALL work the same.

    What you don’t seem to understand is that what the broker listed as your job, no matter what the job title, it would ALL have to be verified. If you tried to be fraudulent and try to seem like you were a W-2 employee, then they would ask you to provide the W-2’s and they would have called the company you worked for and FURTHER verified it.

    e-mail me if you have more questions…your broker is telling you correctly, but he isn’t going to put his license on the line for you to commit tax fraud.

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