With rates that come around once in a generation, everyone is in a rush to try to refinance their mortgage. However, with government regulations burying home owners and mortgage originators with mountains of disclosures, the process can seem daunting. However, here are some tips for you to be ready to make your next refinance as painless as possible.
1. Have All of Your Documentation Ready….Yes All That Documentation.
File your taxes, get your w2’s, checkstubs and have bank statements ready. Also in some cases, bankruptcy papers, divorce decrees.
Not having all of your documentation ready doesn’t prevent you from applying or even getting a great mortgage rate, but your mortgage lender will have to order the equivalent support from sources and those take more time than if you provided them yourself.
Remember, this is 2012 and there has been a mortgage meltdown with a great number of laws that require your mortgage loan originator to satisfy additional procedures in order to get your loan completed.
2. Know Your Home’s Value.
While home values have not been hit as hard in the cities in the Midwest, like St. Louis, Kansas City, and Indianapolis, they are still well off their peaks.
Most of us know what our home was worth at the peak of the housing bubble, but not now.
While a website like www.zillow.com is a good place to start, it is often inaccurate and unreasonably conservative.
Even if you think your home may be worth less than what you owe, there are still programs specifically for you like an FHA streamline, or a HARP loan.
3. Know Your Credit Score.
In today’s market, the minimum credit score that is getting a mortgage approved is 640. If your score is not above 640, it will take some time to get it there. For others, the price of credit, or the interest rate you can obtain, is tiered by credit score. In other words, a person with a score of 740, get a better rate on their mortgage that a person with a 700 score.
4. Allow the Appraiser to see Your Home as Quickly as Possible.
Again, in this market, the chief concern is determining the value of your home. This is most frequently done with a report from a licensed appraiser. The appraisal report is normally the documentation that takes the longest time to produce, so make sure to make the appraiser a top priority.
5. Accept an Offer with a Reputable Lender.
One of the worst things you could do is go through all the entire mortgage application process, only to pursue another application with a rate, “Too Good to Pass Up”. These often happen from “trigger leads” sold to out of town lenders by the credit bureaus which sell your data as soon as you start inquiring into mortgage financing. They offer great rates on non-standard documentation but that usually changes by the time apply and/or get to closing. So stick with someone you know.