When you refinance a mortgage, lenders often require the same documents you provided for the original loan. This includes proof of income, proof of insurance, credit information, debt status, asset status, and additional documents. You and any co-borrowers of the loan (such as your partner or spouse) must submit pay stubs for the last two or three months. You'll also need to provide a copy of your home insurance policy to verify that you have adequate coverage for your home.
If you're self-employed, you may not need to show pay stubs, but you'll likely have to submit profit and loss statements and federal tax returns as proof of income. Forms W-2 or 1099 are also necessary to supplement the income information from your pay stubs. For employees, these would be the W-2 forms. For an independent contractor, this is likely to be a Form 1099. Lenders usually request information for two years, but this can vary from lender to lender.
Tax Returns are also necessary whether you receive W-2 or 1099 forms every year. These documents show your income trends, the income you may be receiving from investments, and other financial information. Your lender can use this data to get a more complete picture of your financial situation. A key part of determining your debt-to-income ratio (DTI) is your current level of debt.
Therefore, your mortgage lender will turn to your credit to see a statement of outstanding debts. In addition to all your financial information, your lender will likely want to make sure that you have insurance coverage. When you apply for a refinance, you'll need proof of valid homeowner's insurance, because once the process is complete, you'll continue to pay the mortgage on your home to the lender.
