Getting started on your refinance
When you refinance your existing mortgage, you are essentially paying off the existing mortgage debt and replacing it with a new loan. Many of the same costs are involved in refinancing a loan as are in first-time financing.
The lender needs key documents from you and your co-borrower (if you have one). These include employment information, pay stubs and asset account statements. If self-employed, provide the last two years of tax returns.
Items to gather
To expedite the paperwork process, start gathering the following items:
- Pay Stubs. Current pay stubs for the most recent 30-day period.
- W-2 Forms. IRS W-2 forms for the most recent two years.
- Tax Returns. Personal tax returns for the two most recent years.
P&L Statement and Balance Sheet. If you are self-employed and own more than 25% of your business, business tax returns for the most current two years, a year-to-date profit and loss statement and balance sheet.
Bank Statements. Current bank statements for the most recent two-month period or quarter.
Landlord Information. If you are currently renting a home, please provide the name, address and telephone number for your landlord(s) for the last 12 months.
Rental Agreements. If you own rental properties, provide current rental agreements on all rental properties and expense-related information.
Closing Statement. If you have sold a home within the last six months, please provide your closing statement for the property sold.
Sales Contract. If purchasing a home, please provide a copy of your executed sales contract and all addendums.
What costs are involved?
Low-cost refinance loans are available. This is a brief rundown on costs that could be associated with a refinance loan:
- Application Fee - Charged by the lender to process your loan application.
- Credit Report - Charged to provide your credit report to your loan officer and/or lender.
- Title Search and Title Insurance - Charged by the title company to check whether the property is free from liens or title defects. You may be able to get your current title company to reissue a new policy and save money.
- Survey - The lender may order a property survey to document the current status of the land your property is on to avoid disputes and other related issues.
- Loan Origination Fee - A fee charged by the lender to process, underwrite and fund a loan, and provide administrative services.
- Discount Points - One point is equal to one percent of the loan amount. You may want to pay discount points to secure a lower interest rate.
- Private Mortgage Insurance (PMI) – PMI is usually required when the down payment on a conventional loan is less than 20 percent of the home’s purchase price.
- Miscellaneous Fees – Document preparation, recording and tax service are other fees which may fall under this category.
- Prepayment Penalty - If your existing loan carries a prepayment penalty clause, you will have to pay a percentage of the outstanding loan amount for paying the loan off early.
VA, USDA and FHA loans may have other associated costs.
Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your long-term goals.