Important Things Necessary For Home Refinancing
Are you in need of extra money? Do you want to take advantage of low interest rates to refinance your home so that you can fund a specific project? Refinancing your home can be a great way to obtain necessary cash so that you can remodel your home, add a new roof, or take care of something else entirely. But banks are not going to simply refinance your home with no questions asked. There is some information that they'll need first. Some of this includes:
Income verification: A home refinance works very similarly to the original mortgage that you got on your home. The bank or lending company will want to check to make sure that you will be able to pay for the new loan. Even if the lower interest rate will actually result in a lower mortgage payment, they still have to confirm that your income will support this payment. Just like with your original mortgage, the more stable your employment history has been the better.
List of assets: Even though your income says that you can afford the home refinance, that's not the end of the story. The bank or lending company will want a list of assets to help them gauge what your other expenses may be. They will want to make sure that you aren't doing something like trying to pay off several cars and another house on one tiny income. If you do own another property but rent it out, make sure to include that rental income with whatever other income you might have.
Credit history: If you have a lot of credit card debt, the bank or lending company may find it difficult to do the home refinance that you're hoping for. On the other hand, if you intend to use some or all of the refinance money to eliminate your credit card debt and to decrease your monthly expenses as a result, they may give you a little leeway. Depending on the lender, they may okay the loan if you meet with one of their refinance officers and show him or her a reasonable plan for getting out of debt. Otherwise, the lender will view large amounts of credit card debt as making it more difficult to make your monthly mortgage payment. As a result, too much debt will make it extremely unlikely that anyone will be able to refinance your home.