Mortgage refinancing is a complicated process, and your lender should work hard on your behalf. However, mortgage refinancing is a two-way street. Here are three things your loan agent needs from you in order to do a stellar job.
1. Information
Studies have shown that many people are less comfortable talking about money than they are discussing their sex lives. But if you undertake a mortgage refinance, you'll be going over some fairly personal topics, financial and otherwise. Your loan officer or broker may ask you about your citizenship to make sure that you provide the necessary proof of legal residency. You may be asked about your divorce and resulting child support obligations. Are you suing someone or being sued by someone? Prepare to disclose the details of your lawsuit, because a judgment could affect your ability to repay your mortgage. The same goes for dings in your credit or bounced checks on your bank statements. These are all fairly sensitive subjects that could affect your mortgage refinance approval. Your loan officer is your advocate, so present your case to an underwriter the way a lawyer does to a judge. It's important that he or she has all the pertinent facts to do the proper job.
In addition, to find the best mortgage product for your individual needs, a good loan officer should ask about your lifestyle; a mortgage that's affordable for a young couple may not be a good fit for an older couple. They should gauge your risk tolerance and time frame to see if an adjustable-rate or fixed-rate refinance is appropriate. He or she should ask about your immediate and future plans that might affect which mortgage product you choose. To some degree, the right loan choice will depend upon future events, such as retirement, sending kids off to college, starting a business, adding to your family, or even if you plan to sell the property or convert it to a rental.
Due to the sensitive nature of some of this information, you need to look beyond getting the best mortgage rates when shopping for your refinance. Winnow out some competitively priced mortgage lenders, then interview loan officers and choose one with whom you feel most comfortable discussing your finances and goals.
2. Respect for time
A good loan officer or broker returns your calls promptly and tries to make himself or herself available as much as possible. But even the ones who are glad to routinely explain Truth in Lending (TIL) disclosures at 8 o'clock on a Sunday night would appreciate it if you can call during normal office hours.
These professionals also love clients who turn in requested paperwork quickly because it helps them get your mortgage refinance documents out fast. This gives you time to review them at your leisure before signing, and gets your mortgage refinance closed before your interest rate lock expires. It is also helpful if you return their calls as soon as possible when questions come up about your application, and it's important that you make your home available to the appraiser at your earliest convenience.
Understand that no underwriter, loan processor, loan officer or mortgage broker asks for paperwork or explanations if they can do without them. No one wants to make the process more difficult for you or for them.
3. Teamwork
A true professional works hard to make sure that refinancing is as easy as possible for you, and to minimize any glitches that come up during the process. You can help by keeping things simple and consistent. It's best, for example, if you don't change jobs while your new mortgage is being underwritten. Lenders have to comply with new quality assurance initiatives and that means they will probably re-verify your employment immediately before closing.
Don't go shopping for new credit or open up any new accounts until after the refinance is completed. Lenders may also pull a new credit report right before releasing the funds for your refinance. If there are new inquiries, you'll have to explain why you were trying to increase your debt load, and if there are new accounts, your file may have to be underwritten all over again. Also, keep paying your bills on time. If your credit score drops appreciably, your loan may be re-priced or, worse, your approval may be withdrawn.
Doing your part helps your loan officer or mortgage broker do a top-notch job, and that's a win-win for both of you.
