Are you looking into refinancing your rental property? With the low interest rates we've been seeing this past year, now is the time to refinance your mortgage before the rates start creeping up again.
Lower interest rates is why I'm refinancing a 7.5% loan secured against one of my rental properties. But unlike the days when all it took for a refinance was the tax assessment, a credit report and a signature, banks have toughened up the standards for getting a loan and require stacks of paperwork like I've never seen. According to my loan officer, loan fraud has been so pervasive in the banking industry that mortgage underwriters are asking for copies of pretty much anything that relates to a borrower's household finances. For anyone considering a refinance on a home or rental, these are the documents you will be expected to provide.
Past 2 years tax returns and not just the 1040 part of the return too. If you are self employed, own a business, own a rental, benefit from stock income or whatever, the underwriters will want all that information.
Last 2 months of bank statements. Our loan officer wanted two months of statements from the checking and savings accounts from our primary bank, our secondary bank, and even Paypal.
Proof of taxes and insurance. Proof of taxes is the Property Tax bill that a homeowner receives towards the end of the year which shows both the assessed value of the property and the tax due. If you own rental properties, these will need to be included as well.
Proof of income. Last month's pay stub is no longer enough proof of income. Our bank required the last two pay stubs from my husband, 3 years of self employed business statements, two years of W-2s, two years of 1099s, and even a letter from the administrator of our family trust.
Two years worth of retirement statements. If you are vested in a retirement account, be prepared to provide two years worth of statements from your 401(k) and company retirement account.
The completed loan application. The last time we refinanced, our loan application was only a single page in length. Current applications are now 5-6 pages long and require a complete breakdown of your financial picture.
If you are looking to refinance in the months ahead, part of preparing for a loan will be tracking down and making copies of all this information. Starting early will avoid delays once you begin the application process.
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