1. Unrealistic appraised value
Overestimating your home’s value is a great way to hurt your chances during a home refinance. Many homeowners do not follow recent sales in their neighborhood and assume that the value is at least what they paid for it. Today, one of the most common reasons why refinances do not close is that the appraisal comes back too low.
2. Poor Paperwork
Homeowners who do not provide the right paperwork risk having their loan scrutinized by underwriters. This will delay the process and risk a rate lock expiration. It is extremely important to review document requirements ahead of time with your loan originator so that the process is fast and efficient.
3. Home renovations before appraisal
Starting major (or minor) renovations to your home before an appraiser has completed an inspection is a very good way to get turned down for a mortgage.. Lenders will not close on your loan if the home is not in “move in condition” which means all rooms must be in working order. If you are doing a cash out refinance for home improvement, wait until after the appraisal is complete to begin the work.
4. Do not communicate
A lack of communication can really disrupt the loan process. It is important to remain accessible and not to disappear. Some times, further documentation is needed after the loan has been approved and before closing. It might be your most recent pay stub or a paper trail of a large deposit into you bank account. Stay in contact with your loan originator throughout the process and wait to go on vacation until after your mortgage closes.
5. Work with a “Big Bank”
If you decide to work with a large retail bank for your home refinance, be prepared for a long, drawn out process (45+ days) and higher rates/fees. The “Big Banks” have tons of loan requests every day and have no incentive to provide lower cost loans. If you want the best available deal, it is important to work with a broker who can search through daily rate sheets from wholesale lenders. These companies do not have the same name recognition as banks, but they offer the same loan products with better rates and fees.
You can search wholesale lenders instantly on RateJab to find today’s lowest mortgage interest rates.
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