If you are refinancing your home mortgage, there are several steps you must go through to successfully complete your loan. You will need to gather certain documents for the lender and complete certain actions in a timely manner. While gathering this documentation may be time-consuming for some, the savings you get with your new loan will make your extra work well worth the effort. If you are shopping for a refinance loan, it pays to have these documents on hand so that you can easily send them to several lenders (if necessary) to get the right loan to meet your needs.

Proof of Income

First, you will need proof of income. Most lenders will accept this in the form of your last two or three pay stubs, which show not only your income but your regular deductions and taxes. If you are paid once a month, two months’ worth is usually sufficient; if you are paid more often, you should gather the equivalent of two months’ worth of pay stubs, especially if you have deductions taken out at different times during the month, such as insurance premiums or dues for organizations. Be sure to make copies of all your pay stubs and keep the originals in a safe place.

Remember to include all forms of income. If you have investment income as well as your regular salary, be sure to put that down on your application and keep a copy of your latest statement providing proof. Similarly, while you do not have to put down income such as child support or alimony on a loan application, you should probably include it, especially if your income is low, so that you will have more options with the lender about your refinance.

Current Debt

You will also need a list of your current debt load. While most lenders do not require you to collect your actual bills, allowing you to fill out a list instead, collecting all your bills is a good way to see balances on revolving credit lines, required monthly payments and other information. Make a table showing the name of the creditor, the balance owed, and the monthly payment. Keep one month’s bills together so you can easily find account numbers and other information if needed. Remember, when lenders ask about “debt load,” they mean accounts with a balance, not your utilities or other recurring monthly expenses, such as groceries. Keep a separate list with those budgeted amounts handy, as well, in case your lender asks for a projected budget.

Tax Returns and W2′s and/or 1099′s

You will need a copy of your last W-2 statements and your tax returns. Some lenders ask for two years’ of tax returns. These not only verify your income, they show trends in your earnings, and give information about investment income or loss which may affect your total income level as calculated by the lender.

Bank Account Statements

Your savings and other accounts must also be documented. A bank statement of your savings account is sufficient if there is not a lot of change in the amount; you can also ask for a printout of your savings history for the last year at your bank. Lenders will usually not be satisfied with copies of your savings passbook, although if they are not considering this money as part of the proof of required income to make the loan, this may suffice.

Prior Appraisal and/or Survey

Most lenders will always require a current appraisal (especially in this market) however if you have a survey done within the last 5 years it may save you a few hundred dollars as typically any survey done within the last 5 or 10 years is often acceptable.

Credit Report?

As for your credit report, its a good idea to understand what your credit score is well before applying for a loan however mortgage lenders will not accept any copy your provide. When you apply for a mortgage you give a mortgage lender permission to run your credit report themselves. Keep in mind that any time anyone requests a credit report, it affects your score slightly; lenders look at this as an indication that you may be about to try to borrow large amounts of money, which will affect your debt ratio. The more “hits” you have on your credit report, the more it will affect your score. Some lending brokers get around this problem by requesting your credit report prior to sending your applications to their various lenders but there is always a potential short term risk of damaging your credit score by shopping around too much.

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