refinance

Are you ready to refinance vacation home?

Am I prepared for the paperwork?
Am I prepared for the paperwork? © zwola fasola/Shutterstock.com

A potential lender will often request two years' worth of income records, two months' bank statements, your credit reports and an income analysis, says Patti Frank, vice president for Americana Mortgage Group, based in Manhasset, N.Y. "A lot more paperwork is required these days in lending than was ever required in the past," she says.

"It's always good to have compensating factors, like good credit scores and money in the bank," Frank says.

Your debt-to-income ratio -- the ratio of your total debts to pretax income -- is an important measurement of affordability. Frank says most lenders don't want borrowers to stretch past a 40 percent debt-to-income ratio.

In some cases, a lender will go to 45 percent, says Carl Noriega, president of the Florida Association of Mortgage Professionals.

Lenders often want at least two months' worth of payments, taxes and insurance in the bank, says Matt Hackett, underwriting and operations manager for Equity Now, a direct mortgage lender in New York City. They'll want a list of assets, too.

If everything runs smoothly, refinancing takes about the same amount of time as a regular mortgage -- in normal times, about 30 to 45 days, Noriega says.

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