Prepárese para refinanciar
Some homeowners are surprised to learn that refinancing a home means applying for a new mortgage loan. Remember all of the paperwork involved in a mortgage application? Maybe you would prefer to forget!
You may be wondering why a lender would check your credit and verify your income if you already have a mortgage. After all, doesn’t having a mortgage mean that you already qualify for a mortgage? Well, a lot can change after you purchase a home. If you’re getting ready to refinance, here’s a checklist to make the process as smooth as possible.
Budget and goals
- Be clear about the purpose of going through with a mortgage refinance. What would you like to gain by refinancing your mortgage? How does a refinance fit within your larger financial goals?
- Understand the potential drawbacks of a refi. Will the benefits of refinancing outweigh the time, effort, and expense?
- Use a tool like our budget worksheet to figure out your income and expenses for the past month. How much money was left at the end of the month?
- If your refinance would result in larger mortgage payments, how much more could you comfortably afford?
Mortgage and title
- Review your most recent mortgage statement.
- Be sure that the statement accurately reflects your payment history. If you notice any errors, call your servicer right away.
- Find your outstanding principal balance (i.e., the remaining amount of money that you owe).
- Find your current interest rate so you can compare it with current rates offered by lenders.
- Stay current with your mortgage payments.
- Mortgage loans in delinquency or default cannot be refinanced.
- Continue to pay your current mortgage – including your second mortgage, if you have one – as agreed.
- Be aware of any involuntary liens against your property.
- Depending on your new loan and the nature of the lien, you may need to satisfy the lien holder before you can refinance. Your lender can guide you on this issue, but first be aware if any liens are in place.
Credit history and accounting of debts
- Order free copies of your credit report at www.annualcreditreport.com
- Review all information for accuracy, and follow steps to resolve errors
- If your report shows collections, judgments, or late payments, be prepared to ask your lender what corrective actions you will need to take, if any, to qualify for a refi.
- Keep your credit score strong to lower your interest rate.
- Only acquire debts that you’re prepared to repay.
- Pay your accounts as agreed – on time, with at least the minimum payment necessary to keep your account current.
- Keep the balances on your credit cards at a reasonable level.
- Avoid any new, unnecessary debts or credit inquiries.
- Gather legal documents if you are responsible for paying any obligations because of a legal action (e.g., child support or restitution).
- Gather bankruptcy discharge papers if applicable.
Income verification
- Ask your lender what documents they will need to verify your income. They may require:
- Pay stubs for the past 30 days.
- W-2 forms for the past two years.
- Federal income tax returns for the past two years.
- Statements from Social Security or other benefits programs.
- Pension statements.
- If you’re self-employed: business tax returns, a year-to-date profit-and-loss statement, and a list of all business debts.
Asset verification
- Collect full statements from all of your checking, savings, and investment accounts for the past three months.
- Be sure that the statements contain all pages, front and back, including any blank pages.
- If you have recently moved large sums of money in or out of your accounts, be ready to explain the transactions to your lender. You may be asked to write a letter of explanation for these transactions.
Our refinance team is here to make the process smooth and simple. Give us a call at 800-526-7145, option 6 or email refi@homeloanserv.com to learn more about our refinancing options and how they can help you reach your financial goals.