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Mortgage Refinance Application Overview
Just like when you obtain a mortgage to purchase a property, lenders require that borrowers submit a loan application when applying to refinance their mortgage. Be it for a mortgage to purchase a property or a refinancing - all lenders use the same standard mortgage application form – referred to in the lending industry as a Universal Residential Loan Application (URLA). The mortgage application contains a lot of questions about a borrower's income, assets, debt, residence history and employment history. The lenders use this information to determine your ability to qualify for the refinance. They want to make sure that you can afford your monthly payment and pay back the mortgage over time.
The loan application is an relatively lengthy document with multiple pages and many questions and fields you are required to fill-out. The good news is that most lenders provide an online mortgage application which streamlines the process and allows you to submit the application from the comfort of your own home.
- View our example mortgage application including the extensive information required
In addition to the online or paper application that you fill-out, applicants are also required to provide personal and financial documents to confirm the information in you submitted. For example, lenders usually require that borrowers provide pay stubs (two months); bank, investment and retirement account statements (two months); tax returns (two years); W-2 forms (two years); and, current account statements for any loans you have such as credit car, auto and student loans. If you are self-employed or own an investment property you are required to provide additional documents including supplemental tax information as well as certain bank and financial statements, as applicable. For a refinance you are also required to provide your current mortgage statement, most recent property tax bill and homeowners insurance declaration.
We provide a mortgage checklist that lists the personal and financial documents you will likely be required to provide to the lender when you apply for a mortgage. Information from these documents is also used to fill-out the loan application so we recommend that you gather, organize and review them at the beginning of the refinance process.
The personal and financial documents that you provide are part of your application and used by the lender to make sure that the information you provided is accurate. After your appraisal report is completed, lenders add the property value and other information to your loan application. Lenders also attach your credit report and other documents to the application and the completed package, including the title report and appraisal report, is reviewed by the lender's underwriter who ultimately approves or rejects your refinance. The underwriting process usually takes one-to-four weeks depending on the applicant, lender, escrow period and market conditions.
Underwriting usually approves your loan with conditions that you are required to satisfy before receiving final approval. For example, you may be required to provide additional personal or financial documents or resolve an issue identified on the title or appraisal reports. You may also be required to provide a letter of explanation to clarify an item on your credit report or loan application. When all of the conditions to closing have been satisfied, your mortgage application received final approval and you are cleared to fund and close your loan.
It is important to emphasize that you should provide truthful and accurate information on your loan application. Lying or providing false information is mortgage fraud which is punishable by a fine or potentially jail time. Applicants should contact their lender to clarify any questions about the loan application and make sure they are providing correct responses.
Lenders cannot charge borrowers a fee for submitting a mortgage application or for providing a Loan Estimate. The lender must provide the borrower a Loan Estimate that outlines a good faith estimate of key mortgage terms and costs within three business days of the borrower submitting a loan application. The Loan Estimate basically shows you the mortgage the lender is offering you and enables you to compare refinance terms for multiple lenders. The only fee a lender can charge the borrower when taking a mortgage application is a small credit report fee ($10 - $30).
Additionally, lenders are not permitted to require the borrower to provide documents that verify the information on the borrower’s mortgage application before proving the Loan Estimate. If a lender attempts to charge you to take a mortgage application or provide an Loan Estimate, immediately stop working with that lender and report the lender to the Consumer Finance Protection Bureau (CFPB).
We always recommend that you shop several lenders before submitting a refinance application. Contact multiple lenders in the table below to request refinance proposals including qualification requirements. Comparing refinance terms is the best way to find the lender and loan that are right for you.
Sources
"Uniform Residential Loan Application (URLS)." Originating & Underwriting. Fannie Mae, March 1 2021. Web.
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