Up until now we have looked at the rationalization for taking a mortgage, now let’s discuss the technicality of the process and see what documents are needed in order to secure loan refinancing.
Bear in mind that refinancing a mortgage, especially if done with the same lender, requires fewer documents than when applying for a new loan. This is the case, since the lender already has the facts of our property, income, insurance plans, taxes etc. This is hardly the case when switching to a new lender.
The required docs will vary from lender to lender; will change with the loan program; and even your personal financial situation. But, here are the basic documents requirements when refinancing a mortgage:
Proof of Income
Home refinance require you to provide proof of your income. This can be done either by showing the lenders your workplace pay-check from the past few months (minimum 30 days) or even contact information of your employers from the last 1-2 years.
Independent employees such as self employed, small business owners or even freelances will have to provide their year-to-date profit and loss statements or balance sheets.
You can even show your pension plans, social security, rental property income or any other payments that may indicate your income level. These payments will require legal statements and checking account balances.
Taxes
Along with the income, you will need to provide W-2 forms from the previous year, thus the lender will be able to verify income history and employment status. This is required for each loan applicant.
Self-employed as indicated above will have to show signed tax returns from the previous two years.
Insurance
Lenders will need to see a copy of the homeowner’s current insurance policy. This proves the property is being covered. The insurance also shows the legal description of the home and land and saves you the need to get other proofs of ownership.
Additional Asset Information
- Upon home refinancing you will need to show verification and documentation regarding other assets you may own. This may include bank statements for checking accounts, retirement plans statements, and 401Ks forms.
- Statements for mutual funds, bonds and other securities, may also improve your financial ranking and some lenders will require them.
- Showing your savings and checking accounts may also be a requirement to verify you have sufficient cash for closing costs (for non “no-cost” mortgages).
Other Documents
It is clear that you will need a copy of your ID and proof of your social security number when refinancing a mortgage.
Make sure you provide your lenders with an approved copy of the deed to the property. Other credentiuals such as academic degrees may also be sought by certain lenders, especially if you get preferred students rates.
Also, a copy of title insurance which will be used by your lender verify the taxes, names on the title and legal description of the property.
In conclusion, remember that home refinancing is different with each lender. Every lender will tell you which documents you’ll need to get approved by a lawyer or notary. The more information you have ready, the less time it will take to get approved and close your loan and the less chance that rate will fluctuate. So, be ready!
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