What do you need to refinance your home?

What do you need to refinance your home?

While specific requirements may be different from one lender to another, here is a list of what you can typically expect a lender to check when you apply for a mortgage refinance:

• Credit score: Just like a solid foundation is key to a sturdy house, your credit score is crucial for refinancing. Credit score requirements vary between lenders, depending on what they determine will indicate someone is a reliable borrower who’s likely to make their payments on time. Make sure you know what your lender’s minimum qualifying credit score is before you submit an application.
• Income verification: Your lender will want to make sure you have a steady source of income to repay the refinance loan. Be prepared to provide pay stubs, W-2s, or tax returns to prove that you can take on the monthly payment obligations.
• Home appraisal: To determine the current value of your home, you’ll likely be required to have your home appraised. Lenders will often order a home appraisal on your behalf, and some may even cover the costs so you don’t have to pay for it.
• Equity in your home: Equity is like the money you’ve already invested in your home. Your lender will have requirements about how much equity you must have built up in your home to refinance, and these limits may be impacted by your credit score.
• Debt-to-income (DTI) ratio: Lenders look at your DTI ratio to see how much of your income goes toward paying off debts. Keeping this ratio low may help you qualify for better refinancing options.
• Documentation: Be ready to gather various documents such as bank statements, tax returns, and any other financial information your lender may request.

Mortgage refinance document checklist

Refinancing your mortgage can be a great way to save money, lower your interest rate, or change your loan terms. However, the process may seem complicated, especially when it comes to gathering all the necessary documents and information.

The types of documentation you may need to prepare can be broken down into four main categories: your personal information, your employment information, your financial information, and your property information.

Personal information

• Full name. Your legal name as it appears on current verified identification documents.
• Social Security number or ITIN. Required of you and any co-borrowers. This is required for credit checks and loan processing.
• Date of birth. Lenders will use this to verify your identity.
• Contact information. This will include your current address, phone number, and email address.
• Divorce or separation information. If this applies to you or the property being refinanced, a copy of the divorce decree or maintenance agreement may be required. In addition, if you desire alimony and/or child support payments to be considered income, then you may need proof of payment history, amendments, and support documentation for payments after the closing date of the loan.

Employment information

• Employer(s) verification. Names and addresses of your employers for the past two years.
• Income verification. Your two most recent pay stubs with year-to-date earnings.
• Tax returns. Lenders may request your federal tax returns for the past two years.
• Self-employment documents. If self-employed, be prepared to provide a lender with two years of tax returns or bring your profit and loss statement and balance sheet for the past two years.
• Proof of additional income. If you have additional sources of income, such as rental properties, alimony, or child support, you will need to provide documentation.

Financial information

• Mortgage statement. Your most recent mortgage statement, which should include your loan balance, interest rate, and payment information.
• Bank account(s) information. Account number(s) and current balance(s) of your checking, savings, or any other account(s).
• Assets information. Statements of current assets, such as Individual Retirement Accounts (IRAs), Certificates of Deposit (CDs), stocks, and bonds. For individual investments, a current brokerage statement with the name of the stocks, the amount per share, and the number of shares owned.
• Debt and credit information. Names and addresses of all creditors, and the monthly payment and total amount due for all current loans. Your lender will pull your credit report as part of your application, but it’s a good idea to review it yourself beforehand to ensure there are no errors or discrepancies.
• Rental property information. Federal tax returns and a schedule of all real estate property you own, plus account number and address of the mortgage company if any property you own is not paid for. If the property is rented, provide a copy of the current lease.

Property information

• Recorded deed. Your deed will show the legal owner(s) of the property.
• Title Insurance. A copy of your title insurance will help the lender verify taxes on the property and confirm the legal description of the property.
• Homeowner’s Insurance. A copy of your homeowner’s insurance in order to show that you have sufficient insurance to cover your property.
• Property tax statement. Your most recent property tax statement, showing the assessed value of your home and taxes owed.
• Home appraisal. Your lender will likely require a new appraisal to determine the current value of your home. You should be prepared to pay for this, although some lenders may cover the cost.

FAQs about mortgage refinance requirements