So we have a bit of a mini refinance boomlet on our hands. Funny thing is, just like a few months ago, people are calling me and asking, what is your rate, what are the closing costs and they fail to ask the number one question that should be asked: Can I get approved?
You see those of us who originate loans are highly regulated. Interested rates and closing costs vary a bit, but not very dramatically. The most important thing I ask, and you should too, is if I make the time commitment to take this loan application to the exclusion of anything else I could to with my time (take a different loan, take a nap, take a yoga class) will I be able to get it to the closing table? This is because, I have no money for yoga classes if I don’t close loans, so I don’t want to write loans that cannot close.
What causes loans not to close, you may ask? The unforeseen is the answer. In purchase transactions, unforseen things happen most often with the sellers of property. But in the refinance, the unforeseen is in your second mortgage or home equity loan (HELOC).
What’s hiding is the terms. Many of these loans were taken out by borrowers between 2003 and 2009. They really have not given many of them out since then. Because of that many of them had 5-10 year periods where they lay quiet, you take the money and make a small monthly payment. But in 2013, many of those loans have a year or maybe two left before you either have to start to make a BIG monthly payment, to pay down the pricipal or worse, they want you to qualify for your HELOC at today’s guidelines and if you don’t qualify PAY THEM OFF IN FULL!
Your new, potential first mortgage lender, figures “Ain’t nobody got time for that” and they don’t want to approve you and deal with your second. So first, ask about your second. Save yourself time, energy and headaches.
