FHA Refinance – Part I
Welcome to my refinancing experience. As you may have heard, refis are all the rage, so it’s no surprise that I’m doing it, too. This short series will detail my experiences as I try to do what many homeowners are hoping to do right now, which is refinance their home and lower their payments. My husband and I are trying to do an FHA refinance and it requires many documents, many of which take a while to get if you don’t have them already.
I have already found a mortgage broker, Seth Raddue, a Zillow.com professional and President and CEO of TriStar Finance Inc. and have been given a set of “to-do’s” before the process can begin.
Today was a big day. I finally got all of the paperwork that I needed to give to the loan officer to start the refinancing process. Here is everything I needed:
- Two of my most recent pay stubs - If you have not been in your current position for the entire year like myself you will also need to provide your previous position’s latest pay stub or documentation of your previous salary. Also, if you are on the original loan with someone else — in this case my husband — you will need to provide their pay stubs as well.
- One of my most recent mortgage statements - Make sure you hold on to your most recent stub, even if you have an automatic payment set up and have no need to keep the paper statements.
- The past two years of my W2s - If you don’t have them on file, but did them online, you can log on to the Web site where you did your previous year’s taxes and pay a small fee to get copies of your prior year’s taxes.
- Past two months of bank statements from all accounts – I typically shred mine as soon as I verify that everything is correct. This is not a good idea if you are trying to do a refinance. Hold on to everything!
- Any statement from creditors that will affect or change my credit – There was an error on my credit so I had to call the creditor and get a letter verifying the change. I only found out about this error after the loan officer checked our credit when we first inquired about the refi. This document is important because it allows the loan officer to re-check your credit without having it affect your score (if done within 30 days).
- Recent documentation of investments - This includes IRAs, 401Ks, stocks etc…
Our mortgage broker is now going to check it all over to make sure everything is okay. If it all checks out he will work with appraisers to get a ballpark on my home value. If it’s not high enough, it could prevent us from refinancing. This part of the process is a stumbling block for lots of Americans these days. If they’re underwater on their mortgage (almost 17 percent of people who bought in 2008, when we did, are underwater), or if their current loan is within 96.5% (for FHA) of the value of the home, it’s a no-go. If the ballpark comes in high enough we will have a formal appraisal done.
Chances are our home value may not be high enough to qualify, so we have been warned that we may need to buy down our mortgage. We are hoping that is not the case but if it is, hopefully it will fit into our budget.
So now it is just a waiting game. Hopefully the mortgage rates will stay as low as they have been. As soon as I find out something new, I’ll be back with another post…
Tags: HUD HomesRelated posts
Posted by Carlos Sagastume on January 31, 2009. Filed under HUD Homes.
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