Why Proof of Income Matters and Its Many Uses
Proof of income provides an important number to landlords, lenders, and other entities that require it. This piece of document provides facts about your income and relevant information. Your income is a crucial component when it comes to determining a number of things like the amount you can get when you apply for a personal loan or how much you will pay for your health insurance plan. Knowing your income and understanding how it impacts several aspects of your life are very much essential in this day and age. There are many things that you need to know about proof of income and how it impacts your life, especially if you are self-employed.
Before understanding how proof of income benefits you, you have to first understand what it is. Now, if you say proof of income, you are referring to a piece of paper or set of documents that is requested from you. Entities like landlords and lenders need this piece of document to verify your income as well as find out your ability to pay.
A proof of income letter is even requested by certain entities and organizations. This letter functions as proof of your income as well as current status of employment. Depending on the situation, this letter may be written by you, an accountant, an employer, or a social worker. Included in this letter should be basic information about your income so that people who will get this letter will know your earnings. Inside this letter often includes your hourly wage or yearly salary as well as the average hours per work that you work. You may also incorporate how you foresee your income and if you can sustain it in the coming years.
Besides the letter of proof of income, you will also be asked to provide more supporting documents from the lender or renter you choose like your paystub. To know what other documents you require, take the time to ask the lender or landlord you are dealing with.
There are a lot of purposes for your proof of income document. Any document that proves your income will depend on the lender if you want to know which one is preferred over the other. One such example is the scenario where some lenders will be accepting only your pay stub from you and others requiring you to submit your federal tax return last year in addition to your pay stub. When it comes to your proof of income documents, always bear in mind that they vary and can be used for an array of purposes. It is important to note that you can get these documents from various sources. There are also some documents that are going to be more useful than others. For those who are working as self-employed individuals, take the time to know what requirements for proof of income for self-employed you will be needing from the lender or landlord you are considering.