Verify Income

• Because a mortgage refinance consists of re-applying for a home loan, lenders have to verify your finances and employment. The ability to afford your home loan payment affects the approval process. Having an existing mortgage on file doesn't guarantee an approval. Personal finances can change wherein you may have lost a job or taken a job that pays less. These factors affect approval, and lenders will request your most recent pay stubs or tax returns to review income and employment history.
  
  

Credit Reports

• Expect your mortgage lender to pull a copy of your credit report from one or all of the three major bureaus to assess your credit history and score. Other debts held also affect a refinance approval, and lenders will calculate your debt-to-income ratio to see if you qualify for a new home loan. Debt-to-income ratio refers to the percentage of your income spent on debt payments every month. To qualify for a home loan, debt ratios cannot exceed 36 percent of your income. Lenders also look for a credit score 680 or higher.
  
  

Banking Statements

• Refinancing a home loan involves paying closing fees, and lenders will inquire as to how you plan to meet this expense. No-cost refinances allow you to wrap the costs of closing into the new loan balance. But if you plan to pay this cost out-of-pocket, plan to forward documentation to prove your personal assets. These documents can include banking statements, retirement accounts and information on other investments.
  
  

Other Documents

• Other documentation required to refinance a house includes a copy of your homeowner's insurance. Lenders must verify that you insure the property and you have adequate coverage on the house. Mortgage lenders will also request a copy of the title insurance to know you are the rightful owner of the property, and to verify that there are no property liens or taxes owed. If refinancing with a new mortgage company, you will need to supply information on the bank holding the present mortgage, the account number and the balance owed.