Mortgage Refinancing Checklist

As rates continue to remain near historic lows, you may have been considering refinancing your current mortgage loan.

Whatever your motivations for refinancing, make sure you’re prepared with the information you’ll need to set you up for success. We’ve created an easy step-by-step checklist that’ll take you from documentation all the way to locking your rate.

Step 1: Determine the Loan for You

There are a number of reasons why you may want to refinance your current loan. Whether lowering your monthly payments, shortening the life of your loan, or using your home’s equity to pay off debt or fund home upgrades, the possibilities are endless. At the end of this checklist, we’ll review a couple of great mortgage options that may fit your needs.

Step 2: Complete a Loan Application

You’ll need to complete a loan application with your lender. This can be done in person, over the phone or even online.

With Rocket Mortgage^® by Quicken Loans, you can talk to a licensed Home Loan Expert by phone or chat with one by using the “Talk to Us” button located on every screen.

During this process, you’ll provide information about yourself and anyone else who will be listed on the mortgage, such as your spouse or partner.

Step 3: Gather Up Documentation

Next, you’ll want to gather up a variety of documentation that your mortgage lender may need to approve you for a home loan. While this documentation may vary based on which lender you’re working with, the loan program you currently have and your personal financial situation, there are a few items that remain consistent:

Pay Stubs

In order to apply for a mortgage refinance, you’ll need to provide proof of income. Your lender needs to ensure that you have the financial capacity to pay off your new mortgage, in addition to living expenses and any long-term debts.

You and anyone else who will be a co-borrower on the loan (perhaps a partner or spouse) will need to provide pay stubs from the past two to three months.

Additionally, if you’re self-employed, you’ll need copies of your last two federal income tax returns as well as profit-and-loss statements in order to verify your source of income.

Start preparing now by making copies of all these documents and keeping the originals in a safe place. You’ll want to have these items at the ready.

Homeowners Insurance

You’ll need a copy of your homeowners insurance in order to verify that you have current and sufficient coverage on your home.

The lender may require that the value of the home be assessed. The value of the home will ultimately determine the amount of homeowners insurance that you’ll pay. You’ll need to contact your insurance company so that your policy can be updated accordingly.

W-2s, Tax Returns and 1099s

Your lender will also require each loan applicant to submit copies of your W-2s, tax returns and/or 1099s to verify past employment and income history. Typically, the lender will ask for two years’ worth of information.

As a general recap, your W-2, traditionally used by company employees, shows your income and the money that was taken out for taxes, while a 1099, typically used by independent contractors and the self-employed, shows your income but not the money taken out for taxes.

It’s important to submit these documents because they can:

• Verify your salary
• Show trends in your earning
• Show investment gains or losses
• Affect your loan approval amount

Be sure to have all two years of documentation ready to submit to your lender for review.

Title Insurance

A copy of your title insurance will help your mortgage lender verify:

• Taxes
• Names on the title
• Legal description of the property

Since a refinance is essentially getting a new loan on your home, you’ll also need new title insurance to go with it.

Credit Report

Before you get approved for a refinance, the lender will perform a credit check by pulling your credit report. Each loan program will have its own requirements for a credit score, so you may want to check all three FICO scores to make sure you’re in the clear.

This is a great preliminary step in the process of getting approved for a refinance, because you may want to do a bit of spring cleaning on your credit report by getting rid of unnecessary credit cards, paying down account balances and making sure your bills have been paid on time.

Statement of Assets

Similar to when you purchased your first home, your lender will need to verify that you have enough cash to cover closing costs and at least two months’ worth of mortgage payments.

The following information is needed for the banker to assess you refi-readiness, You’ll need to provide statements for:

• Checking/savings accounts
• Retirement accounts
• Stocks
• Bonds
• Certificates of deposit
• Mutual funds

Statement of Debts

While your lender will be able to view your existing debt from your credit report, you will still need to provide documentation for your financial obligations.

You’ll need account statements from:

• Your mortgage
• Any home equity lines of credit
• Your car loans
• Any student loans

This list of documents is generally required during the refinance application process. You may or may not need everything on our refinance checklist, but to ensure a fast and easy loan process, it helps to have these items available when you’re ready to complete your mortgage application.

It’s possible to avoid the mountain of paperwork, faxes and emails. Rocket Mortgage by Quicken Loans can sync with your bank so you can share your bank account balance and income information in real time.

Step 4: Understand the Overall Cost

One thing that most homeowners don’t consider when pursuing a mortgage refinance is the closing costs and fees.

A mortgage refinance essentially means you’re entering into a new home loan, and these changes come with a price tag. Depending on your lender, these costs may include:

• Bank fees
• Appraisal fees
• Attorney fees
• Title insurance

While you may be in the market for a refinance, make sure your costs don’t outweigh the benefit of what you’re trying to accomplish.

Make sure you talk with your lender about their expectations of closing costs and fees so you can figure out if a refinance is financially feasible for you.

Step 5: Lock Your Rate

The best way to start the refinance process is by heading over to Rocket Mortgage by Quicken Loans. You’ll be able to get a real, custom mortgage solution with rates and fees based on your unique financial situation, by creating a secure account with your personal financial information.

Loan Options

As mentioned earlier, when you understand the motivations behind your decision to refinance, it’ll help you better determine the right loan for you. Here are a couple of options that may help you accomplish your financial goals.

HARP

HARP, or the Home Affordable Refinance Program, was created to provide homeowners who may not otherwise qualify for refinancing with the ability to refinance their mortgages.

If a lack of equity has prevented you from refinancing, this may be a great opportunity for you to lower your rate.

Eligibility Requirements

There are a few restrictions to be aware of when it comes to qualifying for HARP refinancing:

• Fannie Mae or Freddie Mac must own or guarantee the loan.
• The loan was originated on or before May 31, 2009.
• The current loan-to-value ratio must be greater than 80%.
• The homeowner must be current on their mortgage with no late payments in the last six months.
• You’re generally limited to refinancing only once under HARP. The lone exception to this is if you refinanced a Fannie Mae loan through HARP between March and May 2009. If that’s the case, you might be able to refinance a second time through the program.

One thing to take note of is that this government program ends December 31, 2018, so you’ll want to take advantage of the program before it expires. See if you’re eligible with our HARP tool.

FHA

An FHA cash-out refinance is a great option for homeowners who want to capitalize on the amount of equity in their home, because with an FHA loan, you’re able to refinance with a loan-to-value ratio as high as 85%, meaning you can leave as little as 15% equity remaining in your home.

This means you can use your home’s value to fund home improvement projects, your retirement fund or even college accounts.

Eligibility Requirements

In order to qualify for FHA refinancing, the homeowner must be currently using their home as their principal residence.

Depending on your situation, Quicken Loans may be able to assist you with a minimum credit score of as low as 580. They also take into account your debt-to-income (DTI) ratio when determining your qualification.

Whether you want to lower your payment, shorten your term or even use the equity your home has built up over time to get cash back, now is the time to refinance your mortgage.

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