When refinancing demand spikes, the process slows down. According to the latest data from ICE Mortgage Technology, refinance closings can drag on for about seven weeks on average.
But you can streamline the process by gathering all the documentation you might need upfront. Lenders usually ask for this information once you submit the mortgage application, so prepare by organizing the paperwork now.
Proof of income
Why it matters: Lenders will go over your monthly income to check whether you earn enough to make payments on your new home loan and existing debts, plus pay for your living expenses. Your income documents verify how much you receive and show a trend in your earnings.
For salaried employees
Whether you earn an annual salary or an hourly wage, you’ll typically receive pay stubs and tax forms from your employer. If you don’t have copies on file, contact your human resources department. Here’s what you’ll need to provide:
- W-2 forms from the previous two years
- 1099s if you have a side income
- Pay stubs from the previous 30 days
- Bank statements from the previous two months
- Signed federal tax returns (personal) from the previous two years or a signed IRS Form 4506-T
- The names, addresses, and phone numbers of your employers from the last two years
- A written explanation if you were employed for less than two years or you have an employment gap
For freelancers and independent contractors
Self-employed workers — which include freelancers and independent contractors — don’t receive W-2 forms or pay stubs from an employer. As a self-employed worker, you’ll need to show other types of documents to verify your income.
You can usually download statements from your business bank account and generate business statements using bookkeeping software. Depending on how you filed your taxes, you might also have a PDF copy of your tax return or be able to download one from your online tax filing program. Here’s what you may need to provide:
- Signed federal tax returns (personal and potentially business) from the previous three years
- Your most recent quarterly or year-to-date profit and loss statement
- A list of all business debts
- Bank statements (personal and business) from the previous two months