How are income, HOA, and taxes factored into mortgage pre-approvals?
1) When factoring in HOA, taxes, and homeowner's insurance, how are the figures determined? Since an actual amount cannot be determined, what are the guesstimates based on? Does the bank simply take a percentage of the loan/purchase amount or take an average of real amounts from similar homes. Property taxes are usually figured from yearly assessments, which most of the time are lower than the selling price of a home. My fear is that the guessimates will be based on the selling/loan price rather than the annual assessments of similar homes.
2) When income is factored in, do banks use the Wages portion of a W-2 tax return or the gross salary before any type of deduction? Wages on the W-2 exclude certain types of deductions, so it would be beneficial if the bank chose to use the gross salary.
3) For the final approval on a selected home, will the bank use the most recent HOA and tax information from the prior year for that home to determine what amounts should be considered in the approval, or do they still use guesstimates in the same manner as in the pre-approval?