If you’re struggling with mortgage debt, refinancing may be a useful tool in getting your finances back on track. Whether you’re able to lower your interest rates or improve the terms your home loan, refinancing can be a major help with mortgage debt! However, applying for a refinancing can be a tricky process. With the amount of paperwork to file and requirements to meet, it’s important to ensure that your refinancing application is complete.
Your Refinancing Application Checklist
As you file for refinancing in order to tackle your mortgage debt, be sure to keep the following requirements in mind. Following these guidelines will ensure that the process unfolds smoothly and increase your chances at improving your terms.
· Financial considerations. Keep in mind that lenders do not want to lend money to homeowners who will lose their loans in default or who can’t make their payments. In other words, even if you’re struggling with mortgage debt, you should still meet other thresholds. An FHA, for instance, requires homeowners to meet a minimum financial threshold that establishes the homeowner’s debt-to-income ratio.
· Closing costs. If you are refinancing your home loans, remember that you are also responsible for any closing costs requirements. You must pay these fees as you tackle your mortgage debt. Be sure that you can afford to pay these costs at the time of refinancing, as they generally cannot be added to the mortgage loan principal.
· Equity. To successfully refinance, you must ensure that your home has at least 5% equity. In other words, the loan cannot exceed 95% of your home’s total value.
· Application. Once you have all of the above considerations taken care of, it’s crucial to ensure that your application itself is correctly prepared, so that you can get your mortgage debt under control. You’ll want to include any applicable financial forms such as tax transcripts, pay stubs, W2s, tax returns, bank statements, and any other legal documents that relate to your financial life.