Mortgage Refinancing
Refinancing is the process of paying off an older loan, with a new loan that is secured by the same property. For many homeowners, refinancing their older mortgage can save them tens of thousands of dollars over the life of the loan. If you are interested in lowering your interest rates and effectively your monthly mortgage payments, refinancing your home can be one of the best ways to accomplish this goal. In order to refinance your home, you will first need to apply for a new loan. Here is a checklist of some of the documents that your lender or bank will ask you.
Usually the bank or lender will want to see proof of income for either you, your spouse or both. Usually the lender will ask you for pay stubs that go back at least 30 days, but some may ask for stubs that go back further.
Another important document that your bank or lender will look at is your credit history or FICO score. It is important to note that even if you don’t have great credit, that does not automatically cause you to be rejected. Other factors such as equity and the amount of debt you want to refinance vs. the value of your home can work in your favor.
A document that is frequently requested is a copy of your homeowner’s insurance policy. Your bank or lender wants to make sure that your home is thoroughly covered from any and all disasters that can result in financial loss.
Your W-2 forms will also usually be requested to make sure that you have stable income over the last few years. In addition, most lenders may want to look at your assets, such as an investment portfolio, savings, other properties, etc. This can also help many homeowners be accepted for lower interest rates due to the security factor.
Besides these documents, you will usually be required to have your home independently appraised, especially if you are requesting a “Cash Out” with your refinance or if you have a large debt to home value ratio.
While at times intensive, for the most part refinancing your home is pretty simple and straightforward. For most people, you can start and complete the entire process in less than a month. But before you sign on the dotted line, always make sure you shop around.
