How do you refinance your property?
Before beginning the process, you want to ensure that the market is offering better interest rates than the interest rate you currently have on your loan.
Next your loan officer will request a few documents:
- W-2
- Tax returns
- Asset information
- Bank statements
- Savings account balance
- Investments account balance
- Proof of income
- Title insurance
- Homeowner’s insurance.
W-2 & Tax Return
These forms will confirm the borrower’s employment and annual income.
Asset Information, Bank Statements, Savings Account Balance, Investments Account Balance
These forms help lenders analyze your personal financial health or your businesses financial health. Through these statements they will be able to see your or your business’s level of liquidity, all liabilities, net worth, cash, non-marketable securities, marketable securities, the accounts average balance and all assets.
Income
Lenders will request the borrower bring in a paycheck or another form of proof of income. Lenders want to confirm that you continue to generate the monthly income that you or your business is claiming to generate. Lenders will typically only require you to bring in proof of income for the last 30 days.
Title Insurance
Lenders will request the borrower shows proof of title insurance as they want to confirm that the person refinancing the property is the owner. The title insurance documentation will not only show proof of ownership but will provide a report of the property’s description and tax information. This helps lenders analyze the full scope of the deal.
Homeowners Insurance
Lenders will request that the borrower show proof of homeowners insurance to confirm that the borrower has enough coverage on the personal or investment property in case of any unexpected misfortunes. Homeowners insurance protects your property in the event that something happens to the property.
After collecting all of these documents you can submit an application along with all of these documents to the lender of your choice. Be prepared to answer any questions and write a letter of explanation. Letters of explanation are typically requested only when borrowers have a history of bankruptcy or have been late on a monthly payment. After the application process is complete, the borrower will have the option to either secure the market’s current interest rate or wait in hopes of interest rates continuing to decrease before going into underwriting. At the underwriting review, the underwriting team will verify the property’s value and condition and your personal financial health or your business’s financial health. At the end of the underwriting process, the borrower can now close the deal and complete the refinancing process.
