The process of refinancing will be similar to the process you went through with your original mortgage. Your mortgage lender will look at your assets and income, other debts, credit score, the current value of your home, and the amount of money you want to borrow. You will need to get a report of your latest credit score. If your credit score has improved since your original mortgage then your interest rates should go down even more. However, if your credit score is worse than it was when you got your original mortgage, then your interest rate may be higher. This is one of the many reasons you should do everything you can to keep a good credit score. Mortgage lenders will also look at the value of your home, to be determined by an appraisal, compared to the amount of the loan you requested. Your loan-to-value ration (LTV) will need to fall into the lenders guidelines before you can move forward with refinancing.
Below is a summarized checklist of what you will need.
- Monthly mortgage statement
- Information about other mortgages on your home, if applicable
- Two most recent pay stubs for all household members contributing toward the mortgage payment
- Last two years of tax returns
- If self-employed, the most recent quarterly or year-to-date profit and loss statement
- Documentation of income you receive from other sources (alimony, child support, social security, etc.)
- Two most recent bank statements
- A utility bill showing homeowner name and property address
- Unemployment insurance letter, if applicable
- Account balances and minimum monthly payments due on all of your credit cards
- Information about your savings and other assets
- It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.)
