Refinance Your Mortgage: Refinancing is often used to lower your interest rate. If rates have dropped since you last financed your home, you may want to consider refinancing. Other common reasons to refinance include paying off a balloon payment, converting an adjustable rate loan to a fixed rate loan or to extract cash equity in your home (cash out). A few reasons for cashing out include: home improvement, an education fund, and consolidating debt.
Refinance Your Mortgage:
REQUIRED DOCUMENTATION CHECKLIST
1. Pay Stubs
When you decide to refinance your mortgage and you go to apply, we will need proof of income. We want to ensure that you have the financial means to pay off your new mortgage, as well as any other long-term debts. As a result, borrowers are generally required to submit recent pay stubs from the past 2-3 months.
2. Tax Returns and W-2s and/or 1099s
To provide further proof of employment and income, be sure to prepare copies of your last W-2 and/or 1099 statements and tax returns. Typically, we will ask for two years’ worth of information. These documents are important because they not only verify your salary but also show trends in your earnings, as well as details about investment gains or losses. Most importantly, this information can affect your total income level and subsequent loan approval amount.
3. Credit Report
Before you are approved for a refinance, we will perform a credit check. While each loan program may have its own requirements, it’s always better to be safe than sorry. So, even if you are just considering refinancing, it is never too early to check all three FICO scores to make sure that you’re on the right track. Remember, the best refinance rates are almost always reserved for the borrowers with the best credit.
4. Statements of Outstanding Debt
Even though we will be able to see your existing debts via your credit report, you will still have to provide documentation detailing your current outstanding financial obligations. You will need to gather account statements on all remaining debts, including your existing mortgage, home equity lines of credit, car loans and student loans.
5. Statement of Assets
Just as when you first purchased your home, verification is needed showing you have enough cash in your savings accounts to cover any out-of-pocket closing costs and at least two months’ worth of mortgage payments. Therefore, copies of statements for saving accounts, retirement account, stocks, bonds and certificates of deposits will also be needed. All of these documents will provide proof of any additional assets you own in addition to your regular salary.
Your Refi Checklist Is Complete, What’s Next?
Now, that you’ve set your goals, gathered all of the necessary documents and decided whether a mortgage refinancing makes sense for you, it’s time to move forward with the application process.
Our mission is to help give you the sharpest path to homeownership, regardless of your starting point.
Why Refinance Your Mortgage?
There are a number of steps you can take before and after you buy a home to make your mortgage payment as low as possible. We’ll discuss some strategies that will help you lower your mortgage payment.
Use the cash from your home to pay off higher interest, non tax-deductible credit cards, student loans, or medical bills. We’ll discuss some strategies that will help you leverage your equity to optimize benefits.
Invest some of that equity by funding a new business, starting a project or a college savings plan. Whatever the purpose may be, refinancing a home can be a great way to access some cash.
Shortening your term may save you interest costs over the life of the loan while building equity faster. You can even set up a mortgage term that expires when you retire – how does a mortgage-free retirement sound?