When it comes to refinancing your mortgage, preparation is vital. Refinancing can take anywhere up to two months if you’re lucky, while untied loose ends on your part in obtaining the information required, to your lender might make that period an even lengthier one. That’s why it’s essential to have all the correct documentation ready to help the process run smoother.
Your Refinance Documents Inventory
To be eligible for refinancing, you will need to do your part in providing specific documentation to be approved beforehand, varying on the type of loan you’ll be acquiring, the kind of lender you’re working with, as well as your financial situation.
Here are the most commonly requested documents you’ll typically be asked to present.
Before doing anything, lenders want to make sure that you are earning enough income to make the mortgage payments, typically asking you (or anyone else partner, spouse etc.) to procure salary statements for the past two or three months to prove your source of income.
If you are self-employed, it is generally expected for you to present copies of your previous copy of two federal income tax returns as well as profit-and-loss statements.
Get ahead of it now. Make copies as a precaution, and you’ll be ready to go.
2. W-2s, 1099s, and Tax Returns
Verifying past employment is also a vital part of the refinancing journey. Your lender will also ask for copies of your W-2s, tax records, and 1099s, typically with up to two years’ worth of information. These measures are done to calculate or predict any variations, if any, from year to year.
3. Insurance for Homeowners
To ensure that you have current and enough coverage on your house, you’ll need a copy of your homeowners’ insurance policy.
4. Statements of Assets
You may find the process drawing similarities to when you bought your first home, as you’ll be asked to produce proof of enough finance to cover closing fees by your lender. You should also expect to produce at least two months’ worth of mortgage payments, similar to when you bought your first house.
You’ll need to provide recent statements from the following people:
• Accounts for checking and savings
• Accounts for retirement
• Accounts for investments
5. Proof of Expenses
Your lender may want proof of debts or other expenses; you may have to double-check the status of your present mortgage by asking you to present a recent mortgage statement.
When applying for a refinance, it is essential to have new statements from all of these accounts at the ready.
6. Extra Documentations
Sometimes it’s best to expect the unexpected when it comes to refinancing. Depending on your financial situation or your potential lender’s requests, you may be asked to supply extra documentation, such as:
• Letters of explanation for previous credit problems or job gaps
• Documentation for child support or alimony payment
• Proof of rental revenue from assets you hold as an investment
• Gift letter or other paperwork proving deposit source
• Documentation on a discharged bankruptcy.
Last but not least…
With the end in sight, you’ll need to ensure you bring your Closing Disclosure form, the required funds needed to close (usually in the form of a cashier’s check), and a government-issued photo ID or driver’s license before signing your mortgage, deed of trust or promissory note.
While getting a mortgage can be a lengthy and arduous process at times, getting ahead of the process through proper preparation will not only speed the process but, more importantly, make the process easier for you.