Refinancing is a great option, particularly when rates are still historically low as they are today. Because you already have a mortgage, you can expect your refinancing to be somewhat similar to your previous mortgage application. First and foremost, when considering any loan, your banker will want to make sure you can pay back the loan over time. Therefore, your banker is going to look at several different areas to get a good picture of your past, present and future financial situation.
When applying for a loan, remember, nothing is etched in stone. However, these three areas will always help your banker identify what to expect when considering a loan, and particularly when refinancing your mortgage.
A Quick Look at Your Past
Your financial history is a great indicator of your future habits; mainly what debt you incurred and how you paid it back over time. Most of this was considered when you first applied for your mortgage. So much of your history will have been addressed, and pretty straightforward if you have kept up on paying your bills on time. However, many people start out on their financial journey unaware of how some unpaid bills, or late payments can stay with them for many years because that information was sent to a credit bureau.
Many people can think back to a medical bill sent to a credit bureau without their awareness. A late mortgage payment because of a lost job. And other individual experiences friends and families have shared. This stuff happens. And it can show up on a credit report for some time. The good news is bankers have seen all of the many ways our history of paying bills can either hurt or help our financial picture, and they are prepared to help us move forward, whatever the history.
Your banker will also look at the jobs you held in the past and the places you have lived. This gives the banker an idea of your stability and again sheds some light on how you have handled your finances over time. The longer you are in one place – both home and work – the more it demonstrates your predictability for the future.
To get a good look at your past, your banker will most likely ask for these documents to process your mortgage refinance.
- 30 days of current paystubs
- Last 2 years of W-2s
- Last 2 years of 1099s
- Last 2 years of personal tax returns
- If self-employed, the most recent 2 years of signed Federal tax returns
Your Present Financial Picture
Your employment today is a huge factor in your ability to pay back your mortgage over time. Your banker will look at your current position and how long you have been with the company. They will want to know your monthly income to make sure you can cover your expenses as well as your proposed refinanced monthly mortgage payment, especially if you want to take cash out. If you have multiple sources of income, you can include that income in your review as well.
Since you are considering refinancing your mortgage, your banker will be very interested in making sure your mortgage payments have been paid on time. Likewise, they will want to again look at how timely you are paying all your bills. You will want to have a copy of your most recent billing statement or invoice for your existing mortgage.
Your banker will also want to make sure you are protecting your current home, so you’ll also want to have a copy of the declaration page of your Homeowners insurance policy. At the same time, your banker will want to see what other debts you have in addition to your mortgage. Be prepared to list your debts. You’ll also want to be prepared to show what assets you currently have – again all to show you can afford your new mortgage and still pay all your bills. In other words – you’re a good risk for a loan because all this information shows that you are credit worthy.
To get a good look at your current financial picture, your banker will most likely ask for these additional documents to process your mortgage refinance.
- 30 days of current paystubs
- Most recent bank statement(s) for all checking and savings accounts
- Most recent quarterly statement for all other cash asset accounts (401k, IRA, pension, etc.)
- List of credit bills with name of company, balance owed, minimum monthly payment.
- Homeowners insurance declaration page
- Billing statement for any existing mortgage
- Most recent bank statement(s) for all checking and savings accounts
- Most recent quarterly statement for all other cash asset accounts (401k, IRA, pension, etc.)
- List of credit bills with name of company, balance owed, minimum monthly payment.
Your Future Looks Bright
Having all your financial documents in place – past and present – will help your future look bright because it will help your application to refinance at all-time low rates a lot quicker!
Refinancing now will give you more opportunities to accomplish the plans you have today so you can build on your equity in the future.
Another reason to look at a bright future? Having all your financial documents in order! This is always a huge relief and can make life so much easier when you want to apply for any type of loan in the future. It also helps you make plans and set goals – all of which can keep your financial picture comfortable, contained and prosperous.
The mortgage bankers at Kalamazoo County State Bank are always available to help you with your mortgage refinance and any other loan you’re considering. You can expect to look at a bright future with Kalamazoo County State Bank. Call us at 269.679.5291 or visit us online at https://kcsbank.com/mortgages/.
Loans are subject to credit review and approval. Kalamazoo County State Bank is an Equal Housing Lender.
