How to Read an Income Report from The Closing Docs
An automated income verification report from The Closing Docs enables property managers to securely and quickly interpret an applicant’s net income using verified bank data. No more fumbling through pay stubs, tax returns or W-2s, our automated income verification report will not only expedite the application process for screeners and applicants alike, it provides the most up to date info available and with just a few keystrokes. Increased speed and accuracy improves the experience for everyone.
The article below helps explain our individual and combined income report, and points out key elements of the report.
Individual Income Report
The individual income report displays a single applicant’s deposit history over the prior year.
1. Report Details
The top of the income report states the individual applicant’s full name, along with the income report date, as well as the timeframe the income report covers.
Our income report generally includes 12-months worth of data. However, some banking institutions restrict the time frame according to their business policies. In any case, the report summary indicates the period covered.
To learn more about our income data availability, click here.
2. Deposit History Data Analysis
Our automated income verification report shows the outcome of deposit history data collected compared with monthly rent in order to derive a net income to rent multiplier. If an applicant meets the minimum threshold for this multiplier based on your business rules, the report will read: “Approve”. In the event the applicant does not meet the minimum threshold, the report will read: “Decline”. The default approval threshold is 2.5x net income to rent.
To learn more about the benefits of using net income instead of gross income, click here.
3. Net Income Summary
The Net Income Summary utilizes our filtered deposit data to produce a financial summary consisting of 4 data points:
Annual Net Income - The total amount of recurring income received by the applicant over the past year.
3-month Average Monthly Net Income - The average amount of recurring income per month the applicant has received in the past 3 months.
12-month Average Monthly Net Income - The average amount of recurring income per month the applicant has received in the past 12 months.
Annual Irregular Income - The total amount of non-recurring income received by the applicant over the past year.
4. Recurring Deposits Summary
Directly below the Net Income Summary is a table that lists all of the applicant’s recurring deposits, along with the monthly net income, start date, and end date of the income streams.
These are the income streams used to calculate the figures in the Net Income Summary.
5. Summary of Accounts
The Summary of Accounts shows the applicant’s balances for each account within a given financial institution. This includes all depository accounts, including checking and savings.
6. Recurring Deposit Details
Each recurring deposit stream will display a list of deposits to back-up the calculated figures from the period collected. The transaction list will include the name of the deposit, the amount, and the date deposited.
7. Non-recurring Deposit Details
Deposits that do not qualify as recurring deposits are included in this section. This generally includes one-time bonuses, infrequent deposits like tax refunds, and transfers from external account such as Venmo and PayPal.
Combined Income Report
The combined income report aggregates multiple applicant’s deposit history to produce an income report for the entire household. This report is used to learn the household’s capacity to pay rent, as opposed to that of an individual applicant.
By attaching two or more applicants to an income screening, you can create a combined income report.
1. Deposit History Data Analysis
Our automated income verification report shows the outcome of deposit history data collected for the applicant group compared with monthly rent in order to derive a net income to rent multiplier. If an applicant group meets the minimum threshold for this multiplier based on your business rules, the report will read: “Approve”. In the event the applicant group does not meet the minimum threshold, the report will read: “Decline”. The default approval threshold is 2.5x net income to rent.
2. Combined Net Income Summary
The Combined Net Income Summary uses all of the applicant group’s income data to produce the Annual Combined Net Income, 3-month Average Combined Net Income, 12-month Average Monthly Combined Net Income, and Annual Combined Irregular Income, similar to the individual income report.
3. Recurring Deposits Summary
An overview of each applicant’s recurring deposits are listed here, grouped by the owner of the deposit stream.
4. Summary of Accounts
An overview of each applicant’s account balances are listed here, grouped by the owner of the account.
5. Individual Net Income Summary
Below the combined applicant summaries are the individual summaries for each applicant. This break out allows you to analyze an individual’s financial health separate from the overall household.
6. Individual Net Income Summary - Unique Situations
Sometimes, an applicant shares a bank account with another member of the household, or produces no income. During the screening workflow, the applicant has the opportunity to choose these options and the workflow allows the application to proceed without an income screening charge for such an applicant.
7. Individual Deposit Details
Finally, each applicant’s recurring deposits and non-recurring deposit details are listed, similarly to the individual income report.