Refinancing Your Home? Documentation Required for a Quick, Easy Closing

Many homeowners dig out from under debt by refinancing their home. It can be an easy process, or an egregious one - YOU get to decide which. How? By preparing beforehand.

"Should I refinance?" A few things to ask ponder when considering refinancing:

a) How long you expect to be in the home? Why is this important?

It helps the loan officer determine which type of loan is best for you. If you plan to sell in 3, 5 or 7 years, the type of loan you take out will vary significantly than the one you would consider if you plan to stay in the home for the rest of your life.

b) How much equity you have in the home? Again, this goes directly to the type of loan you will consider, and/or even if you will want to refinance at all. If you have only 20K in equity, and it costs you 5 or 6K in closing costs, you might not want to refinance at all.

c) What will closing costs be? See just above. Many homeowners fail to realize that closing costs can be as high as 5% of a loan's cost. A lot of factors determine how much this will be, eg, your credit score, your home's value, the type of loan product you choose, the lender you use, etc.

If you decide to refinance, prepare well in advance because your lender will ask for a multitude of documents. The process can be completed in as little as a week if you are fully prepared.

A good loan officer can help you decide if refinancing makes sense and then find the best mortgage program for you. However, remember, it's up to you. No one knows your wants, needs and dreams better than you - so always make sure the final decision is yours, not something you've been talked into.

This following documentation establishes your credibility as a borrower, and your ability and willingness to repay the loan.

1) Proof of income: Typically, you'll need to show original pay stubs for the last 30 days. This proves that you are still on your job.

You will usually have to give your originals to your loan officer, so that they can hand them off to the underwriter. Be sure to make copies of all documents before you hand them off. Your loan officer will usually return all documents to you at the closing, or mail them to you shortly thereafter.