Rushing to Refinance Your Mortgage: 6 Tips and What to Avoid

Prepare your income explainers.

Over-document everything before you even start the process. Reynaldo Reyes, a mortgage broker in Orange, Calif., said lenders often question income gaps when people have taken parental leaves. So come ready with hospital bills, baby pictures or a note from your employer if you have one.

If you work for yourself and took a long vacation, be prepared to prove it and make your best case for consistent income over time during periods when you were on the job.

Ace the appraisal.

If someone comes to examine your house, that person may not have been in your micro-neighborhood for a while, if ever. Hand over a brief document explaining idiosyncrasies that affect valuations, and make copies of comps that the appraiser may miss. They’re busy.

Check in with your lender or mortgage broker beforehand to ask about the kinds of red flags that can ding your appraisal, whether it’s a lack of proper carbon monoxide detectors or in California, water heaters that are missing the requisite earthquake-resistant straps.

Did you remodel? Prove it with paperwork and before-and-after photos that you put in a single folder with your comps.

Avoid dumb credit moves.

“Don’t open up any new auto loan, credit card or any new credit while this is in process, period,” said Quicken’s Mr. Banfield. “People get very excited about refinancing and suddenly want to go out and buy a new BMW.”

That instinct is natural when money frees up. But lenders often check your credit report more than once during the application process. If there have been inquiries or new debt, they come back to you with questions, which slows things down.

Article source: https://www.nytimes.com/2020/03/13/business/mortgage-refinance-delays.html