6 WAYS TO KILL A LOAN
For those of you who are about to refinance their mortgage, here are some sure fire ways to kill the deal, when having been done right, would have funded.
1. Starting your big remodeling project before the loan instead of after.
2. Failure to disclose to your Mortgage Consultant all the issues your house may have, like a leaky pipe under the bathroom sink.
3. Too much information. Don’t get too chatty with your appraiser
4. Putting your house up for sale just prior to the refi deal
5. Stop making your mortgage payment while refi is in progress
6. Giving away too much information
I have run into this way too many times. A borrower starts a remodeling project thinking that if they run out of money to fix it they can refi and get cash out to fix it. Not gonna happen. Houses are appraised as is, for starters so your gonna get killed on the appraisal, and very few lenders will do the loan if there is anything more that a grand that needs fixing. Wait till you get the loan then do that project you’ve been dreaming about.
If your house has a leaky roof tell your Loan Officer. If you’ve got sinks that are clogged, or leaky pipes or kitchen cabinets that are pulling away from the wall, tell your LO. He will also want to know about any mold mildew, or water stains. By disclosing these things and more you give him the opportunity to come up with a plan and a solution to get your loan done, as opposed to blind siding him with a leaky roof, when it is too late to fix.
When the appraiser’s in the house go read a book or something so you don’t get drawn into a conversation about the home. If the bathroom sink gets totally clogged every couple of days you do not need to tell that to your appraiser. If you do he will make a note of it and your lender will require you fix it, and then you get to fork out another hundred bucks to have the appraiser come out and make sure it’s fixed.
If you are thinking about doing a refinance, make a decision about selling or doing a refi before you take any action. If you put the house up for sale before you try to refi most lenders will require it to be off the market for a period of time, maybe 6 months before you refi. Some will do the loan sooner but will hit you with an increase in rate by a percent.
Here is a biggie; stop making your mortgage payment while the refi is in progress. Something could easily come up that could delay the close and you could end up with a thirty day late which could be a deal breaker. This is a very common problem.
Giving away too much information to underwriters can kill the deal as well. If you think you may need to do a stated deal don’t show any income documents. Once seen, they cannot forget and there goes the loan. Give things on a need to know basis.
Sometimes it feels like it is too easy to lose your loan, in fact it seems like your lender is just looking for ways to kill the deal, but it is their job to asses risk and make sure they are funding solid deals. Develop a good rapport with your broker or mortgage consultant; disclose everything to them, then the two of you can come up with a plan to make sure the deal gets done. It is a little like you and your broker up against the evil that is the underwriters.
Stick to this and you will not fall victim to the more common mistakes and you will have a much greater chance of getting your deal done, even if you have less than stellar credit and little income.
Good luck and happy refinancing.
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