Published April 25, 2012
Getting ready for refinancing is no problem. Just make sure you have every financial document you have ever produced, including the paystub from your sophomore year in high school when you worked at the Stop ‘n Shop. Xerox them in triplicate and send them with your loan application. When you are asked for the documentation in a different format, shuffle, dig deeper in the paper pile, and send to lender again. Repeat one more time.
Okay, so it’s not quite that bad. But these days, as banks are trying hard to cover their assets, the burden is on you to provide the very fullest picture of your personal financial situation.
I began the process a month-and-a-half ago and collected the basics: proof of income (usually pay stubs or copies of W-2s), copies of homeowners insurance, title insurance, and basic asset information. The latter is to give the lender the assurance that you have enough money for closing costs: statements for liquid investments, such as checking, savings, and money market funds.
But who knows if all that info is even enough? In most cases, it will not be. You start out with a call with your mortgage representative to see if you are even eligible by their standards for a refinance. It’s useful to have the documents you collected nearby because you’ll be asked questions about where you work, for how long, where you’ve lived, how much you make, how much you have in your liquid accounts.
Then, the hard work begins ... the document drama.
It starts with the list of basics above. But because banks are under much stricter guidelines for loans, they will likely ask for much more from you than the last time you refinanced, if you did so pre-2008, boom-gone-bust. The secret here is to give them exactly what they ask for.
I was asked for a list of 12 months of statements showing that I individually paid for my mortgage. I went online to my banking site, found what I thought would suffice, and sent a copy of automatic payments from my account for the past year. Trouble was, it showed only the last four digits of the account number and not my name. The underwriter came back and said I needed to at least give one full statement with my name and account number, detailing in it the deduction of the mortgage payment. I considered myself lucky -- at least they didn’t ask for all 12 months of such documentation.
Throughout the process, at any time, something new can pop up. Of course, the lender goes to your credit report and anything that surfaces can become an issue. For example, I had to write a letter stating why I had two addresses associated with my name. (I had moved from one home I sold more than 9 years ago, but for some reason it still appeared on my report even though the mortgage had long since been paid off, and my current address was the home I owned and mortgage I wanted to refinance.)
A signed letter was required explaining what the lenders called a “discrepancy”.
I have not yet received the final call of documents required. But knowing it could be close to a full-time occupation to gather them, as I await the tides of refinance paper required for my loan, I am sending out postcards saying I’ll be away for a while.
But, because I am mailing these to friends, the next line -- “Wish you were here” -- is decidedly absent!