If you’re considering mortgage refinancing to take advantage of today’s low refinance rates there are a number pitfalls you’re likely to encounter. The following list comes from reader feedback and is the top five complaints homeowners have refinancing their home loans in today’s market.
- Multiple Requests for Documentation
- The Lender Required an Appraisal That Was Too Low
- Mortgage Refinancing Is Taking Too Long
- My Refinance Rates Aren’t What Lenders Are Advertising
- I’m Paying Too Many Fees At Closing
A good mortgage broker will tell you exactly what documentation is needed to get you through underwriting. Usually what happens when your lender makes repeated requests for documentation is that more information is needed about the documentation you’ve submitted. If this happens don’t be afraid to ask why they need more documentation.
Another reason for repeated requests is that you’re dealing with a lousy loan officer. It may be the person is simply after a commission and has already moved on to their next score. This could explain last-minute requests after you thought everything was finished.
If you find yourself dealing with a bad broker don’t be afraid to take your business somewhere else. You’re paying this person an origination fee for their attention. If you’re not getting it you have the right to work with another broker.
After the housing bubble burst lenders tightened their underwriting requirements for mortgage refinance approval. No matter what area of the country you’re living, despite what you think your home is worth if the lender orders an appraisal chances are it’s going to come in lower than you think it should. You might even find your appraisal is reasonable and then the underwriter lowers the value.
You can protest a low appraisal or try a different mortgage lender. Regardless of how you approach appealing a low appraisal you’re going to have to pay for a new appraisal even if you try refinancing with another mortgage company. Different lenders have different underwriting requirements so don’t be afraid to take your business to a different company.
There are a number of reasons this could be happening. Bank of America currently has a 90 day backlog on applications which isn’t likely going to get better soon. It’s possible your application was denied during underwriting and the broker doesn’t want to be the bearer of bad news so he or she is just letting the file just sit there. This could be another sign of a bad broker that’s too busy making sales than taking care of their customers.
If you haven’t locked in your refinance mortgage rates in writing then you don’t have anything. If the rate quotes you’re getting are coming in higher than what lenders are advertising the likely culprit is your credit score. Mortgage lenders advertise rates based on a lofty credit score of 820 or higher; if your score is less than this chances are your refinance rates will be higher also.
Some lender fees can’t be avoided while others like the mortgage origination fee can be negotiated. There are also a number of junk fees like application and processing fees that can be avoided. The best advice around when it comes to junk fees is to read the fine print and do your homework. There are upfront fees some lenders require and if your loan never closes you’re out of luck.
You can learn more about paying less for mortgage refinancing by avoiding unnecessary markup and junk fees by checking out my free Underground mortgage videos.