Home Refinancing Checklist

Italian composer Gioacchino Rossini once said, “Give me a laundry list and I’ll set it to music.” Imagine the composition he could have been inspired to create with a list of documentation needed for a mortgage refinance!

Home refinancing has become vastly more difficult in the aftermath of the economic crisis. Mortgage lenders have developed a renewed passion for verifying the minute details of prospective borrowers’ financial situations. If there’s a refinance in your immediate future, expect your lender to double and triple-check your credit qualifications. This can be a tedious process, but you can help things along by getting your documentation together in advance.

Refinance lenders focus their verification efforts on three areas of your financial picture: your income, your assets, and your debts.

Income verification

In Rossini’s Barber of Seville, Count Almaviva disguises his identity – and his assets – in order to win the girl he adores. Lenders are increasingly wary of similar deceptions, so they’ll need to see written proof of the money you make. They’ll want:

•    Two months or more of your most recent pay stubs if you’re employed; a current profit and loss statement if you’re self-employed
•    Two years or more of your most recent W-2s if you’re employed; two years of recent tax returns if you’re self-employed
•    Documentation of other income that will be used to calculate your ability to pay, including Social Security payments, child support, or alimony

Asset verification

Another Rossini heroine – La Cenerentola (Cinderella) – has a habit of manifesting assets that don’t really exist. You don’t have to produce proof that your carriage won’t turn into a pumpkin at any moment, but you will have to provide information about your assets. You’ll need to gather:

•    The three most recent monthly statements of all bank accounts, pension plans, 401(k)s, IRAs, and brokerage accounts
•    Proof of homeowner insurance on the property being refinanced
•    Property deeds

Debt verification

Unfortunately, we can’t all be as successful as Rossini, who made a lot of money in his short career. But chances are that you’ve needed to borrow money along your life’s journey, and your lender will be interested in your debts. They can verify some of your obligations by pulling your credit report, but that may not reflect the most recent changes in your account. It’s particularly important to be prepared with paperwork if you have recently paid off any debt balances. Also, since you’re refinancing, you’ll need to authenticate the terms of your existing mortgage loan. The documents you’ll need are:

•    Recent statements for credit cards, your existing mortgage, and student, auto, and any personal loans
•    Loan agreement and the note associated with your current mortgage
•    Divorce paperwork if you’re obligated to pay child support and/or alimony

This checklist of required documentation may not inspire you musically, but it does prepare you for what lies ahead. Even Rossini would have to agree that organization takes the stress out of life’s most tedious processes. A mortgage refinance is no exception—just go in with an open mind and a big stack of paperwork and, with any luck, you’ll come out singing.