What Documents Do I Need to Refinance a Mortgage

As long as you know what to expect and are prepared, you`ll likely find a solid refinancing agreement and save a package over the life of your loan. Some documents you can use to prove that you have insurance are: When applying for home loan refinancing, your lender will need proof of income. Lenders want to make sure you have the financial resources to pay off your new mortgage as well as other long-term debts (such as car loans) or other living expenses. Even though your lender may see your existing debt on your credit report, you will still need to provide documentation about your current outstanding financial obligations. You will need to collect bank statements on any remaining debt, including your existing mortgage, home equity lines of credit, car loans and student loans. Having enough assets can make loan approval more likely, as it tells the lender that a borrower has enough resources to cover a new mortgage. While some mortgage experts predict that interest rates will remain close to historically low numbers, it`s no surprise that refinancing continues to be a popular option for home loans. However, before you start comparing lenders, it`s important to get a 360-degree view of your options. A refinanced mortgage is usually reserved for qualified borrowers – homeowners with sufficient income, good credit, and typically at least 20% of their home equity. Therefore, borrowers must prove their mortgage creditworthiness by presenting the required documents to the potential lender.

Lenders also usually want to see what other assets you have to determine if you have enough collateral on hand to cover a few months of home payments as well as the closing costs associated with the loan. Your assets may include: Many homeowners don`t understand that because of these onerous interest charges and/or additional fees, the mortgage repayment amount is usually higher than the balance owing. One tactic to determine the payment amount is to add a mortgage payment to your current balance. Debt Statement An important part of determining your debt-to-equity ratio (DTI) is your current debt level. Therefore, your mortgage lender will pull your loan to see a statement of outstanding debt to help the lender verify that coverage is sufficient, they may order an appraisal to verify the value of the home. If the value has changed since you purchased your insurance policy, you will need to work with your insurance company and update the coverage limits. Why it matters: Your lender calculates your debt-to-equity ratio by looking at your current debt balances. This helps the lender determine if you can cover the monthly mortgage payment. 7) Loan valuation by value: The lender will also typically require some sort of (perhaps informal) valuation of your home`s value compared to what you owe for the existing loan.

2) Insurance: You`ll likely need to provide documentation for two types of insurance: Are you ready to figure out what your monthly payment might look like? Use our refinance calculator Sometimes a homeowner may not be able to provide the required documents to apply for a refinance. If you`re too busy to find your copies, or if you`ve lost them (it happens!) and don`t have time to get replacements, you may not feel like a reference is worth it. So what? As a result, borrowers usually have to submit the current payslips for the last 2-3 months. So be sure to make copies of all these documents and keep the originals in a safe place. Is mortgage refinancing worth it? To help you make a decision, answer the following questions: If you have a government-backed mortgage and want to explore your refi options with fewer documentation requirements, send us a message or give us a call. If you`re self-employed, you may not need to file payslips, but you`ll likely need to file profit and loss returns and federal tax returns as proof of income. Before your refinance application is approved, lenders conduct a credit check. While each loan program may have its own minimum credit score requirement, it`s always best to be safe. Even if you`re just considering a refinance, it`s never too early to review all three FICO scores to make sure you`re on track. Homeowners should also consider whether or not their current lender charges a prepayment penalty fee. Most lenders waive a prepayment penalty if the homeowner pays more than 20% of their mortgage in the year.

This can happen when a homeowner sells a home, pays a lump sum, or refinances their mortgage. Think back to your original mortgage and all the documents you had to gather. For a refinancing, the documentation of your refinancing is pretty much the same. The main goal is to prove to your lender various aspects of your finances. You will need a copy of the deed registered with the names of the rightful owners as well as your title insurance, which includes a legal description of your property. Title insurance also helps the lender review your property taxes, which are included in your debt-to-equity ratio (DTI). 5) Total assets: You must document all your financial assets except your home. That means documenting things like: All lenders have slightly different requirements, but you can bet they`ll likely ask for documents in the following seven categories: As demand refinancing increases, the process slows down.

According to the latest data from ICE Mortgage Technology, refinancing transactions can take about seven weeks on average. With so many people applying for refinancing these days, it can take a lot longer than expected. You have no control over your lender`s security with applications. However, you can speed things up on your end by gathering all the relevant documents before you start the refinancing process. Lenders usually want to make sure you have enough cash to cover a number of mortgage payments. This exact number varies by lender. Lenders may require you to have up to 12 months of money in the bank in case of an emergency. Or find your original papers. Determine your current interest rate, outstanding principal balance and maturity date.

This will help you understand how much you can save on your refinanced loan and what rate you need to achieve your goals. Jon Meyer, The Mortgage Reports credit expert and licensed MLO, has a few additional tips to help you with your refinance checklist. He recommends: Most refinance loans require a new home appraisal to verify the current value of the home. To qualify for refinancing, you must do your part to provide specific documentation that must be approved in advance, depending on the type of loan you are going to purchase, the type of lender you are working with, as well as your financial situation.