The stress test does apply when you change lenders but in today's rate environment that should not slow you down.
Think back to your original mortgage and all of the documents that you had to gather. For a refinance, the documentation for your refinance is pretty much the same. The overall purpose is to prove different aspects of your finances to your lender.
All lenders have slightly different requirements, but you can bet that they'll probably ask for documents in the following seven categories:
1) Proof of income: Proving your income generally requires the following documents.
The last 30 days of pay stubs
Your current tax returns
Tax forms like T4's and Notice of Assessment ( NOA )
2) Insurance: You'll probably need to produce documentation for two kinds of insurance:
Homeowners insurance, to verify that you have enough current coverage for your home.
Title insurance, to help your lender to check the taxes, the names on the title, and the legal description of the property.
3) Credit information: You'll need a recent credit score and credit reports.
4) Monthly debt load: While your lender will be able to see your debts during a credit check, you will still have to account for those debts. That means pulling together documents for things like:
Your current mortgage
Home equity loans
Credit cards
Auto loans / Lease Details
Student loans
5) Total assets: You need to document all of your financial assets other than your home. This means documenting things like:
Savings accounts
Stocks
Bonds
Mutual funds
CDs
Retirement accounts like RRSP's and TSFA's
Other real estate
6) Appraisal: Your lender will probably also ask for a current appraisal of the house.
7) Loan to Value appraisal: The lender will usually also ask for some kind of appraisal (perhaps informal) of how much your house is worth compared to what you owe on the existing loan.
Once you've got all of this information together, it should be smooth sailing, right? In a perfect world, yes. Expect plenty of delays regardless of how well organized things are on your end. Not that this is a reason not to do a refinance-but knowing what to expect can make the process seem a little less frustrating.
Further information or Direct Answers are available from Veronica Thompson 647 628 7007 or VThompson@MortgageAlliance.com
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