Here's a special Tax Time edition of Do's and Don'ts for prospective buyers or refinancing homeowners embarking on, or already engaged in the  mortgage process.  In case it needs to be said, the "Don'ts" are strictly for comedy (though many are based on real world examples of things that will kill or greatly delay the mortgage process and/or impact your satisfaction with your new home).

The "Do's," on the other hand, are potentially valuable nuggets of information that may greatly benefit your mortgage experience.  In fact, most of them can end up making a difference in the success or failure of a loan, and at the very least, can help avoid costly delays. 

Do:          Write off legitimate deductions such as charitable contributions, mortgage interest, and dependents.
Don't:      Form an LLC, use it to finish your basement for your son's family, then deduct a "business loss" of $25,000 on your tax return.


Do:          Give your loan officer complete copies of your last two years' federal tax returns, W2's, and 1099's.
Don't:     Tell your lender  "your underwriter can't really go by those tax returns, because at least half of my income is cash."

Do:          File your taxes early if you anticipate buying a home this spring.
Don't:      Explain that "you've been really busy", so you haven't filed taxes for a few years, but hope to soon.


Do:          Remember that self employed borrowers face additional income verification hurdles for mortgages.
Don't:     Quit your salaried job of 12 years to "join a great new multi-level marketing network" a week before your purchase closes.


Do:         Be sure to include all applicable income on your tax return.
Don't:     Give your lender several additional W2's while mentioning "I think I forgot to include these on my taxes."

Do:         Double and triple check your tax return for errors prior to submitting it to the IRS.
Don't:    Give your lender a "preliminary copy" of your tax return, then file one with an additional $13,000 in business expenses.


Do:         Deduct all charitable miles driven as permitted by IRS tax code.
Don't:     Include your faithful hound "Gus" as a dependent on your tax return.


Do:         Subtract court ordered maintenance from your income as a legitimate expense.
Don't:     List maintenance expenses on your tax return, then tell your lender "oh, I haven't really paid that yet."


Do:         Remember, if self employed, that underwriters don't look kindly on declining income.
Don't:     File a tax return showing $127,000 in net income, then submit an amended return with income of only $16,000 once your loan is in process.


Do:         Write off unreimbursed business meals and mileage per IRS guidelines.
Don't:     Deduct $7,900 in business meals, then tell your lender "most of these were just for my wife and I, but my CPA said to include them anyway."