How to qualify for a homeloan refinance?
If you are planning a mortgage refinance, you may wonder what the process for qualifying is today. It may have been many years since you went through the process of getting your original mortgage, and the details might have become a little fuzzy. Also, you may wish to know if the current credit crunch has changed the lender's process of qualifying new applicants? These are valid questions, which we will examine below.
First, if it has been a long time since you qualified for your first home mortgage, you may have forgotten what the process entails. You may have been living in your home for ten or even twenty years or more. With such a long time having gone by, you want to take time to review before attempting your new mortgage refinancing. Is qualifying for refinancing a difficult process? The answer is no, though having all your records well kept and easily accessible can make it much smoother. What types of records will you need? Most lenders require proof of several things before they are comfortable offering you a new mortgage. First, if you are currently employed, they will want the name, address and phone number of your employer. They also may want the name and phone number of your current boss, so they can call to confirm your employment status. Not all lenders will require this, as many will simply contact the Human Resources department of your respective company. The longer you have been employed, the better your chances of qualifying.
Second, the lender will need proof of your income. The range of time they request can vary, but at minimum they will ask you to verify the last three months of income. At most, they will ask for the last year. How can you prove this? If you are an employee, then this can take the form of pay stubs, your last W2 or your last tax return. Pay stubs are probably the most common, so if you are considering refinancing your mortgage, you should begin to save these immediately. This is a good idea anyhow, as they are essential for taxes as well.
If you own your own business, the process will be a little different. As you have no pay stubs, the lender will simply rely on your last tax return, or perhaps your bank records for the prior months. If you are retired, then to prove your income you will submit your pension, investment and social security income documents.
In the third step in qualifying for a new mortgage, the lender will examine your personal credit score. This score can carry substantial weight in the process. The better your score, the more attractive your loan, though many times even poor credit scores qualify for at least a few loan products.
These are the basic steps you will go through when qualifying to refinance your home. The limits on all of these categories are more stringent since the mortgage debacle several years ago. However, if you have a good history of employment, a solid income and a decent credit score, you should have no problem qualifying for an excellent rate.