There’s a new mortgage refinancing approval process in town and if you get this wrong it could cost you that low refinance mortgage rate. Most of mortgage approval is common sense; however, as one broker points out you should avoid punching out your boss until after your refi is funded. Here’s an article by Dan Green of the Daily Mortgage Reports that describes the new mortgage refinancing approval process and several things you need to know that could derail your application:
When does “cleared to close” not mean “cleared to close”? When Fannie Mae’s involved, that’s when. And, when we talk about loan approvals, this is actually what’s happening; your loan is being underwritten based on Fannie Mae’s guidelines. Loans approved for closing are — presumably — in line with Fannie Mae’s minimum standards.
Fannie Mae Loan Quality Initiave
The new approval process comes from Fannie Mae’s new underwriting standards to cut down on the number of bad mortgage refi loans. As you can see from Dan’s graphic below the process involves checking your credit twice, once on applying and once before your mortgage refinance is funded.
Screw up your credit score before the lender funds your new home loan and you could be looking at an application denial. Dan says your one job while waiting for your mortgage refinancing loan to be funded is to not screw up your credit. This means paying your bills on time, avoid opening new accounts, and keep your job. (Punch out your boss after your home loan is funded)
If you haven’t been keeping tabs on your credit before applying you might not be getting the lowest refinance mortgage rates. You see, the rates you’re seeing advertised by the best mortgage lenders are based on having a credit score of 820 or better. If the refinance rates you’re being quoted are coming in higher than what lenders like Amerisave are advertising the likely culprit is your credit score.
Remember that under the Loan Quality Initiative your lender is required to re-pull your credit before funding your loan. They’re looking for undisclosed debt or any new purchases you’ve made during the mortgage refinancing approval process. If any discrepancies are found that fall outside of Fannie Mae’s underwriting guidelines your application will be denied.
You can learn more about avoiding common mortgage mistakes while taking advantage of today’s best refinance rates while avoiding unnecessary fees and points by checking out my free Underground Mortgage Videos.