There are many reasons why buying New York City real estate is cumbersome and, at times, overwhelming, one of which is because there are so many things buyers have to learn before closing the deal. One of the unique things unique to NYC real estate is the
1- What is a CPA Letter
2- CPA Letter for an Apartment
3- CPA Letter for a Mortgage
4- Sample of CPA Comfort Letter
5- What should include in CPA Letter
6- CPA Letters Required to Apply for Loan
7- How Can I Get a Sample CPA Letter
This is a letter from a certified public accountant, or a CPA, to a prospective lender that vets a borrower’s financial health at the time they apply for a home loan. Lenders need the letter before approving funds for a home loan. A CPA letter is one way borrowers are vetted so that lenders feel more comfortable approving the loan application. One notable point is that the CPA letters do not create ownership rights over assets and they are not likely to be legally binding.
It rarely happens, but there is a possibility that the lender will bring legal action against CPA if fraudulent information is included in a CPA letter. That’s why the letter’s author needs to ensure that the letter is truthful and accurate.
There has been an increasing trend that landlords ask tenants, primarily self-employed individuals, to submit CPA letters. First, they ask to estimate the applicant’s income. Then, they assess that statement to evaluate and determine whether they should consider the individual for tenancy or not.
Lenders ask borrowers to submit CPA Letters and their mortgage applications. They use this document to verify that CPA has reviewed the applicant’s tax returns and self-employed borrower. Additionally, they assess the statement to determine whether the loan should be approved.
From [Office Name]
Address
To: [Lender]
Address
Re: Verification of current income
To whom it may concern
This letter confirms that [applicant’s name] has been the owner of [company name] since 2019. He owns 100% of the company. The company is related to IT.
In 2020, [applicant’s name], total income was $80,000.
If you require any further assistance or information, please feel free to contact me.
Sincerely,
[CPA Name]
In most cases, CPA letters are not legally binding. It is quite rare to see a CPA letter for a mortgage with the intention of legally binding, but it can happen.
The letter should include:
It’s possible the lender may demand a CPA letter from the borrower’s CPA before the loan application is processed. Most lenders request that the CPA letter indicate whether or not the applicant is the self-employed status or, if not, the applicant’s profession.
There may come many occasions a lender or landlord may ask for a comfort letter. For example, lenders may require it for loan approval or any other party trying to verify the client’s income.
A CPA letter is not legally binding, but CPA should not verify incorrect information, or the lender may sue them in court.
Yes, CPAs can verify the income listed on the applicant’s tax return. This is usually the most common request or expectation of a CPA during the applicant’s loan approval process.
In most states, only licensed CPAs are allowed to certify a financial statement. Financial statements should be prepared in accordance with official accounting guidelines.
If the CPA finds an error on any previous year return, the CPA should notify their client of the error and work with him or her to correct the misstatement.
This is a letter that verifies your annual income and employment information. The applicant’s CPA issues this letter to the lender for consideration during the loan application process. If the applicant does not have access to a CPA, he or she can ask a real estate attorney or real estate broker to get a verification letter prepared on their behalf.
You can request a sample CPA letter from your attorney or real estate broker. It is certainly the easiest way to get it done. Remember, a real estate lawyer or broker may have experience in real estate, but CPAs are the subject matter experts when it comes to the financial side of things.
Lenders can waive the CPA letter requirement, but they rarely do so.
Getting a CPA letter is not an absolute requirement for home loan approval, but some lenders specifically ask for it.
It has been observed that nowadays, banks and lenders frequently demand income verification letters from self-employed persons. They demand this letter to confirm their profession and evaluate their income. The loan will be approved or not, depending on the assessment of the income statement.
The request should include:
Although every lender may not require a CPA letter, most New York City lenders won’t process home loan applications without it. With that in mind, you’ll want to add getting a CPA letter to your to-do list when buying property.
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