How to Refinance With Moderate Income
- 1). Call your existing mortgage lender---the company to which you already send your mortgage payments---and explain that you'd like to refinance your home loan. Explain, too, that you don't have a large stream of income coming in each month. Ask your lender if it would still consider taking on your refinance request. Ask, too, about the fees and closing costs that your lender will charge for a refinance. You can expect to pay about 3 percent to 6 percent of your loan amount in fees to complete a refinance.
- 2). Call several other mortgage lenders---as long as they are licensed to do business in your state---and tell them, too, that you'd like to refinance your home loan even though you don't have the highest gross monthly income. Ask these lenders if they'd be willing to take on your refinance. Then ask them for their rates and fees, too.
- 3). Choose a lender that is willing to work with you on a refinance and offers lower rates and fees. Remember, though, that just because a lender promises the lowest fees does not mean it's the best one to work with. Only work with a lender with whom you feel comfortable.
- 4). Copy the important financial documents that your lender will use to determine your gross monthly income and debt-to-income ratio. These documents include your last two paycheck stubs, most recent two federal income tax returns, savings and checking account statements, retirement savings account statements, most recent credit card bills and any other loan statements, such as for student or auto loans. Your lender will use these to determine your debt-to-income ratio. Most lenders prefer that your monthly debts, including your mortgage payment, be equal to or less than 36 percent of your gross monthly income.
- 5). Accumulate evidence of other financial safety nets if your monthly income level is moderate and your monthly debt obligations high. These other safety nets might include a significant amount of money in savings, a high credit score that shows that you have a long history of paying your bills on time or the fact that you are graduating from school with an advance degree that might help you soon land a higher-paying job. Point these pieces of evidence out to your lender to show that even though you only have a moderate gross monthly income, you do have enough financial resources to pay your mortgage payments.
- 6). Sign your closing documents if your lender approves your mortgage refinance application. This will make your refinance official. You'll also have to pay your closing costs at this time, either in one lump sum or by rolling them into your monthly mortgage payments.