How good are we here at Ratezip? HERE’S how good! We’ve been predicting over and over that a refi boom was on the horizon again. Here are just two recent examples.
So, okay, we had NO idea the refi boom would be partly caused by the coronavirus.
Regardless, here we go. Let the refis begin.
As it appears many will be doing a rate and term refi or a cash out refi to use that cash for any one of many reasons, we’d like to help ensure you get the best possible service. Yes, yes, we know you’ve heard the horror stories, but we’re here to help change horror to happy!
#1 Be Prepared
Here are tips on how to be ready for the refi. First of all, read The Mortgage Insider’s Guide to Documentation. Or, just use this handy checklist. Here’s what you need.
- All income documentation:
- The last 30 days of pay stubs
- Your current tax returns
- Tax forms like W-2's and 1099s
- Title insurance
- Homeowners insurance
3) Credit information:
- Your score
- A credit report.
Sage advice, check this before meeting with a lender to eliminate icky surprises.
4) Your Monthly Debts:
- Your current mortgage loan
- Home equity loans
- Credit cards
- Car loans
- Student loans
5) Information About ALL of Your Assets. That includes:
- Savings accounts
- Stocks, Bonds, Mutual funds, and CDs
- Retirement accounts like 401Ks
- Other real estate
You may also need information about child support and alimony, if applicable.
And that’s it, right? Oh stop. Of course not.
Let’s talk about the value of your house (or townhouse or farm or or condo or double wide). How much is it worth? What is the assessed value? What is the appraised value? How much equity do you have (meaning, what is the home value minus what you still owe on it, considering all loans against it)? What value will it appraise at? To determine that, ask a Realtor you know or check local recent sales at a site like Trulia. If you owe more than the home is worth, Sorry Charlie. You may not be able to refi.
Moving on, but perhaps in bizarre order, let’s reference one of my favorite authors, Simon Sinek, and his excellent book, the title of which is perfectly applicable here. Start with Why. That’s right, why do you want to refinance? Do you simply want a lower interest rate? Is it your monthly payment you hope to drop down? Are you planning to consolidate debt? Do you want to shave years off your mortgage term? Do you have plans to remodel, add on, tear down or invest in shady dealings and need cash out? (If the latter, it's probably best not to mention that.)
Whatever your why, be clear about that in advance and know you will be asked. And here’s another thing you’ll be asked--fee payment. That’s right. It costs money to refi. If you “build the costs into” the loan, then you pay over the long term. If you want the lowest possible rate, then you pay points up front. Then there are closing costs and probably the cost of a new appraisal. Refi costs usually range from about 2% to 5% of the loan amount, but that could be higher if you pay points, get charged body parts for appraisals, etc.
If you are clear on your why and have the cash and documentation prepared, you’re good to go, right? Well, there may be another thing you need--patience. Apparently most mortgage lenders do not have the ESP Kreskin-like intuitive powers possessed by Ratezip! (joke)
The National Mortgage News reports, “Mortgage lenders are hiring like mad to handle demand as rates plunge.” Lenders are, once again, very BUSY.
“At Quicken Loans Inc., the nation's largest mortgage lender, Monday was the busiest day for mortgage applications in the company's 35-year history, said Chief Executive Officer Jay Farner. Michigan-based United Wholesale Mortgage, meanwhile, approved $2.5 billion of preliminary loans, a single-day record for the company, according to Alex Elezaj, its chief strategy officer.
… Eric Mitchell, an executive at Michigan-based Gold Star Mortgage Financial, is luring underwriters with signing bonuses and the chance to make big money, assuming they're willing to work long hours.
"If you're not making a $1 million this year as a loan officer, you’re grossly incompetent," Mitchell said. "'I tell them, 'We're not working 40 hours a week, kiss your families goodbye.'"
And with files for people who must meet closing dates stacked up in front of refis for nefarious reasons (another joke!), your paperwork may just take the slow boat to China. But fear not!
Just as ratezip has demonstrated the ability to foresee the future (in a murky way), we are also a team of excellent problem solvers! That’s right. We have devised a plethora of ways to make your refi experience be painless and speedy. Time for a mini digression interruption.
Per above, let’s start solving by focusing on signing bonuses. Become a negotiator. How about if YOU pay a processing team’s signing bonuses for a) first in service and b) a rate cut? Your lender will love you and you’ll save a bunch of money anyway! Sadly, this is illegal, so let’s forge ahead.
These ops teams are working crazy hours. Does it have to be so miserable for them? Surely you know a masseuse, a caterer, a laundromat owner, a pet sitter, a day care center owner! Don’t you think a loan processor or underwriter who knows his/her kids are cared for, dogs have been walked, laundry is done, and who is feeling relaxed and has a full belly is more apt to approve your loan file lickety split?
Or perhaps the staff member responsible for meeting your needs is not having his/her needs met. In other words, if 50% of marriages end in divorce, surely there is one Lenny Loan Processor or Ursula Underwriter who is experiencing love on the rocks and would prefer to work an 80 hour week than go home! Seek and you will find!
And what are you doing these days? As you saw above, some lenders are desperate to hire … maybe anyone … maybe YOU. Think of keeping your day job (so you have the necessary qualifying income) and working nights and weekends for the lender where you filed your refi application! Talk about brilliant. Think of the opportunities--meet the loan conditions during work hours, get a second income stream, get a massage, date Lenny or Urusla! The positive possibilities are endless!
Don’t be fooled, bribes worked. I had a customer once who literally got the address where her loan processor worked and delivered 10 pounds of candy and snacks, some vintage holiday decorations (it was that time of the year), cases of drinks (this was years ago, pre-PC so, yes, wine and beer were included), and food delivery coupons. She was APPROVED before anyone even finished their drinks!
Suffice to say, where there’s a will , there’s a way! I think I have misused a sufficient number of song titles and cliches for today. I am also pulling your leg regarding these problem solutions (mostly). Time for some real fun.
Why is money called dough? Because we all knead it.
What was the US subprime mortgage afraid of? Dying a loan.
An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.
I bought a submarine that I really couldn't afford. Now my mortgage is under water.
My friend mortgaged everything to open a Mexican bakery...Now he makes his living pan handling.
I thought people would flock to my bank if I offered 0% mortgages. But there was literally no interest.
How did the bag of fertilizer help the vegetable farmer pay his mortgage? It raised his celery...