Reasons to Refinance
- Lower your monthly payment
- Consolidate debt
- Use existing equity in your home to pay for expenses
- Shorten the term of your loan
- Combine a first and second mortgage into one loan
- Reduce the interest paid over the life of the loan
- Switch from a variable rate to a fixed rate
- Eliminate mortgage insurance
Below is an estimated timeline with milestones that we'll cover during each phase of the loan process.
1. Submit Documents
2 years Tax Returns (Federal/State/Business) - We need all pages, including any blank pagesEXTENSIONS: If you extended 2015, send the extension, and 2013 and 2014 returns
Year to Date P&L and balance sheet (for self employment)
W2's (2014, 2015)
Pay stubs (most recent, full month)BONUS INCOME: Year-end pay stubs showing 2014 & 2015 bonus amount
Bank and Retirement Statements (most recent two months) - We need all pages, including any blank pagesReview ALL statements for large deposits and provide explanation
2. Complete and return forms
3. Document Large Deposits (cash, check or transfer over $3000)
Be prepared to explain and document any large deposits that appear your bank statements. Underwriters need proof that money is from a legal source and isn't a loan, which affects your ratio calculations.
Documentation may include check copies, additional bank statements, invoices for services provided, and letters from person who gifted money to you. Tips for printing from online accounts:
Screenshots or photos are NOT accepted, so print while logged in and then scan/ email
The full URL needs to be visible
Account number or last four digits need to be included
All pages are needed. If we provide one page that shows 1 of 3, we will be asked for the rest of the pages.
Borrower name should be included, if available.
Transaction histories can't be accepted in place of monthly/ quarterly statements
Show all transactions from the date of the last statement to present.
Scannable is a great app for quickly scanning documents into PDFs with your phone
Click here for examples of correct and incorrect documentation. Documenting large deposits correctly gets us to closing quickly, while doing it incorrectly can cause back and forth, a lot of headache, and delay your closing.
4. We'll run your Credit Report
We typically run credit as part of preapproval to pull both scores and debts associated with each borrower. If this is something you'd prefer to hold off on, please let me know.
5. We'll Order an Appraisal
Once a loan file has been prepared with all required documents, chosen loan program and rate lock preferences have been established, an appraisal will be ordered. The lender will choose an appraiser to evaluate your home and you'll pay the appraiser's fee, typically $500 or $600.
Click here for a copy of the Appraisal Authorization Form and the appraiser will contact you directly to schedule. Upon receipt of your appraisal report, the loan file is ready to submit to an underwriter for approval. The appraisal report typically takes 3-4 business days to come back.
6. Underwriter issues Conditional Approval
Conditions are items the underwriter must review and approve prior to clearing any loan to close. The underwriter will review your loan and issue a Conditional Approval with a list of conditions that must be satisfied. Here are some common types of conditions:
Letters of Explanation (LOE)
These can literally be one sentence at times, and they tend to 1) document the obvious and 2) really annoy. Make sure you hand-sign and date them.
- Two years federal/state/business tax returns
- Social Security /Disability Award Letter - proof of continuance of Disability VA: DD214. COE, disability letter if applicable.
- End of year paystubs for the past two years (W2, overtime, part-time, bonuses, etc.)
- LOE For every credit report inquiry
- LOE for all derogatory credit: collections, late payments, post-bankruptcy derog's.
- LOE for all job changes, gaps in employment, inequities between paystubs and deposits, inequities between
- W2s and Verifications of Employment (VOEs)
- Bankruptcy discharge (all pages)
- Check copies as proof of receiving child or spousal support (must be Court Ordered)
- Divorce Decree, all pages, if applicable
- For pregnancy leave we need a letter, and a copy of the leave from your employer, and proof you went back to work.
- Line 31 of Schedule C, or full business returns
- K-1 and Articles of Incorporation
- Proof of when you started the business, if you shifted from S/E to a W2 job, or vice versa in the past two years
- HUD1 from previous short sales or foreclosures
- Check copies for any rent payments from the past year.
- Proof that home is certifiable.
Important tips for Conditions
- We need all pages, including any blank pages.
- If you extended 2015, send the extension, and 2013 and 2014 returns
- We need all pages, including any blank pages.
- Every large deposit over $3000 that cannot be connected to some form of income must be documented with an LOE + a copy of the check and deposit slip.
- Depending on the number of accounts, we may be able to disregard some of the smaller ones.
7. Final Approval (Clear to Close)
Once all of the conditions have been satisfied the underwriter will issue a clear to close. Once a loan is cleared to close we will contact you to review closing costs and confirm closing details.
8. Aknowledge Closing DISCLOSURE (CD)
A CD provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs). You will be sent the Closing Disclosure (CD) for review and you can sign your loan documents after acknowledging receipt of the CD and the 3-day waiting period has passed so please open this email as soon as you receive it.
9. Sign Closing Docs
10. Loan Funds
Actions to Avoid when Refinancing
Do NOT make large deposits that cannot be explained.
Do NOT take on new debt.
Do NOT take days off if paid “hourly.”
Do NOT get a job in a “different field.
Do NOT liquidate assets.
Do NOT miss payments on any debts reporting on a credit report.
Do NOT co-sign for someone else’s debts.
Do NOT file taxes with a tax liability owing, or with less income than in previous years.