Refinancing? Use this document checklist
Loan officers and mortgage brokers may have their own criteria, but you can generally expect to provide these papers.
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If anything about refinancing your mortgage might be described as "fun," it would have to be locking in your new lower interest rate. But once that's done, you'll have to deal with the decidedly not-fun part of gathering all the documentation you'll need to support your refinance loan application. (Bing: How low are interest rates this week?)
To get started and stay organized, it helps to have a checklist of which documents you'll need. While each loan officer or mortgage broker might have his own specific checklist, here's a look at what you can generally expect:
Photo ID: Typically a driver's license or passport, this document is used to confirm your name, identity and home address.
Pay stubs: You'll need to produce your pay stubs from at least the past 30 days. If you don't have your pay stubs, ask your employer's payroll or personnel department to give you these documents, which must show your name, the name of your employer and your total year-to-date earnings, says Joe Metzler, mortgage specialist at Mortgages Unlimited in St. Paul, Minn.
Asset statements: Gather monthly or quarterly statements from your various asset accounts from the past two to three months. Asset accounts include checking, savings, investment and retirement-plan funds.
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If you don't have your statements handy, you can print them from most financial institutions' websites, Metzler says. Each statement must include your name, the name of your financial institution and the beginning and ending account balances. A printout of your current transactions "usually does not work" for loan application purposes, Metzler warns. Rather, a true statement is required.
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Documentation of deposits: You'll need documentation that shows the source of any deposit of more than a nominal sum, other than payroll.
This relatively new requirement helps the lender figure out whether you have enough money from allowable sources for closing costs and reserves, says Joe Parsons, senior loan officer at PFS Funding, a mortgage company in Dublin, Calif.
W-2 tax forms for the past two years: If you're self-employed, earn commission or tip income or own rental property, you're going to need to produce federal income tax returns for the past two years. Self-employed borrowers might also be required to supply a K-1 tax form, which shows your percentage of ownership of your company. If you're a substantial owner, you'll also be asked to supply the company's tax returns for the past two years.
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If you don't have your tax documents, ask your tax preparer to provide them to you or get copies from the IRS. Be sure to include all the pages and schedules, including the signature page.
A copy of your most recent mortgage statement.
A copy of the original promissory note for your existing mortgage: This relatively new requirement helps lenders ensure that your refinance will offer a legitimate benefit, Parsons says.
"They can look at the mortgage statement, but most lenders want to see the promissory note, too," he says. "It's not a big deal, but it adds more time to the process." If you don't have these documents, call your loan servicer and request copies of them.
Phone bill: A copy of a recent home or cellphone bill, showing your name and address.
Some lenders have added this requirement to find out whether you occupy your home as your principal residence, says Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich.
Divorce decree: If you got divorced within the past two years or want to use the alimony or child support you receive toward qualifying income, you'll need to present a copy of your divorce decree.
Proof of attendance: If you're a first-time homebuyer who has taken advantage of some state or county homebuyer assistance programs, you are required to attend first-time homebuyer education classes. You must show proof of your attendance.
You'll probably notice that this list is "significantly more comprehensive than it was even a year ago," Chivas says. Still, the requirements can be met if you keep track of what you need and what you've already supplied.
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One final tip: Be sure to submit only complete and legible documents. Also, when your lender asks for multiple documents, submit all of them at once. This way, it's easier to keep track of what you have and haven't provided your lender.
My husband and I reconsidered refinancing last year because we were able to get an even lower % rate than 4.25%, which we currently have. The lady we worked with was good and I simply told her I wanted to see the math. She workd it up. Bottom line was that when my husband and I sat down and looked at it, we figured if we could afford another $100 dollars a month that we could do the same thing she was stating and save the $2300 to refinance. We now try to add $150 dollars more. We are excited that we are going to accomplish the same thing by ourselves.
People need to look at the numbers before refinancing. It is really in your best interest.
To avoid the most common complaint of borrowers today that the lender never received the copies of documents that were requested (required), suggest creating a cover letter addressed to who ever you are dealing with (name and title, company, address) and listing each document title and its date. Have a copy of the letter and the documents for your self, and have the person sign and date your copy of the cover letter as having received the documents. NOW they are accountable. Too many times, so much paper is being requested that the loan people just can't or don't file it in the correct loan request folder, thus the loan process drags on and on..
DO NOT GIVE THEM YOUR ORIGINAL DOCUMENTS. Track records show they WILL loose them. Give them copies ONLY.
We paid off our home in 5 years, against the advice of our banker.
He said that folks so rarely pay off their homes that he didn't remember how to do the paperwork.