HOW DO THEY VIEW ME NOW?
Thanks for joining me for part two on how your lender views your loan application and different aspects of your deal. The more you know about what they look for the easier it will be to put together a loan that will close, and close on time to boot.
Everyone wants to refi as an owner occupied loans because the rate is so much lower than non owner, so often there is some type of fraud surrounding this issue. I used to originate prime loans through Countrywide and in their loan docs it had a provision that if the borrower does not stay in the home for a year after the refinance the whole loan comes due and they can act on it if they choose to. You might want to think about this one if ever you are tempted to fudge on something so ‘trivial’ as owner versus non owner.
For those of you who have a second home and want to classify it as a vacation home and not a non owner occupied that they rent out, your second home will have to be at least fifty miles away from your primary residence. Check with your LO on this as it will vary from company to company.
The most important part of your credit report deals with your mortgage history. Some borrowers have a horrible record of paying revolving debt, but have been fastidious when it comes to making the mortgage payment, and that bodes well for the borrower. Your score alone my qualify you for prime rates, but then a thirty day late on your report can easily kick you down to subprime territory. You still may be able to qualify for prime if you send in a LOE (Letter of Explanation). You never know as guidelines do change from borrower to borrower.
For those of you who have a thirty day late on your mortgage, if you can get caught up on it that’s great. However, if getting caught up on that payment really increases the probability of you getting another late ding, you may want to consider letting that late payment just keep rolling. Then you have a rolling thirty day and many lenders will let that keep rolling and never slap you with another thirty day late. Usually lenders will give you six months to a year to roll. If you keep paying up then being late again each new late will ding your report and that will be disastrous to you and your deal.
Hopefully these examples and explanations have cleared things up a bit. During the loan process keep communicating with your broker so that no one is blindsided by any issues that crop up.
In the mean time, good luck and happy refinancing.
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