How to Refinance a House When You Can't Prove Income
It's wise to refinance your home to get a lower payment. If you've lost your job or don't have proof of employer-generated income, there are ways to create a better picture on paper. An accounting firm can create documentation of income for your lender. Having a good credit report helps as well.
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Things You'll Need
- Income statement by CPA firm
- Your credit report
- Proof of cash income
- Checking account statements
- Business income statements
- Co-signer
- Statement of net worth
Instructions
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Assemble as many financial documents to prove cash flow as possible. Checking account statements and invoices for your clients organized into an accounts receivable document can help. An income statement and net worth assessment prepared by a Certified Public Accounting firm are important. If you've lost your job, you might state income from rental property or a part-time business.
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Pull a hard copy of your credit report. Go over any red flags that would cause a lender to take notice. Be prepared to explain any problems, or try to correct them if possible. For example, if you are 30 days late on your house payment, correct this before applying to refinance your house.
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Don't overlook income. If you've loaned your brother-in-law money, put down any amounts he is paying you on a regular basis. If you do consulting or freelance work, have some of your clients write verification statements. Include cash money you receive from family loans.
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Get a cosigner. Putting together income verification and a credit report won't make up for a huge income deficit. One option is to ask a favorite aunt or a good friend with excellent credit to cosign the refinance paperwork with you.
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Show net worth. Your net worth is the total monetary value of everything you own minus what you owe. If your own $200,000 worth of property and possessions and you owe $100,000 to creditors, your net worth is $100,000. A solid net worth gives a lender assurance that you can back up your loan.
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Tips & Warnings
Don't over-inflate your income statements. While it's acceptable to put anticipated income from part-time jobs or cash-only jobs, don't inflate the numbers beyond what's believable. Your loan officer will base part of the decision to lend on how she perceives your character. Getting a loan officer to close the deal is largely a subjective opinion of your creditworthiness and the likelihood you'll repay the loan.
If your home is worth much less than what you owe, it will be difficult to refinance it at a different or lower interest rate. Because your home will need to be appraised again for a refinance situation, make sure your yard and home are immaculate. An appraiser always uses some subjective reasoning in determining the value of any property.
