What Financial Information Is Needed for Refinancing?

To refinance a loan, lenders ask for specific pieces of financial data, including information such as income, expenses, assets and debts. If you don't have acumen in accounting or finance, seek the guidance of an expert such as a financial planner or a certified public accountant. The specialist can help you sort out your financial information, tell you which item is relevant, and show you those items that need short-term fixing.


Income
If you're in the refinancing market, be ready to show lenders you can repay the debt you want to refinance and that you have enough money to settle other obligations. "Obligation," "debt" and "liability" are synonyms. Creditors will want to see your pay stubs -- or corporate statements of profit and loss, if you own a business. The goal is to calculate how much cash you make, which helps determine your purchasing power.

Expenses
Expenses and income are the two sides of a person's profitability coin, so keep operating costs in check so your income statement doesn't show a negative number. Income statement is another name for statement of profit and loss, and lenders use the report to calculate a prospective debtor's disposable income. This last item is money left over after the individual takes care of all expenses, which run the gamut from bills and groceries to rent and insurance.

Assets
There's a direct correlation between your income and assets because money you make through a labor contract or derive from a business venture ends up on your balance sheet. This is what finance people call the report a person uses to show assets, debts and net worth. Assets -- also known as economic resources -- range from land and equipment to cash and tax refunds. Any item with a mortgage or loan -- such as a house -- doesn't qualify as an asset. Net worth, also called personal equity, equals total assets minus total debts.

Debts
The financial relationship that glues assets to income also connects expenses with debts. Therefore, pay attention to your expenses and how you pay for them, because too much debt can cause financial tedium down the road and may lower your credit repute. Debt specialists often refer to the last item as "creditworthiness" or "ability to repay liabilities." Personal obligations range from mortgages and student loans to home equity lines of credit, or HELOC. In a HELOC loan, you have the ability to draw from the account, pay back and redraw as long as your account is in good standing.