Keep Up with the Market

Jul 27, 2022 | Blog, Mortgage

EPM
When rates are on an upward trend, getting mortgages processed and rates locked is essential. Although homeowners may not be refinancing to lower the rate they currently pay, every rate bump means more money they have to pay back.

Here is how to help borrowers who are refinancing stay on track so they don’t miss out on the best rates.

Plan the Goals

Each borrower’s goals will affect the type of mortgage loan you explore. For example, if the homeowner wants to pay the loan off faster, you will look for a loan with a shorter term as the primary criterion and rate as secondary. Cash-out refinances for debt consolidation or home improvements will likely focus on rate as the primary criterion, as will loans for homeowners looking to shift from an adjustable rate to a fixed rate.

If you know why the borrower wants to refinance, you can make sure you only provide them with appropriate loan options. That will save time going back and forth with lenders.

Get the Documents Together

Refinancing can be as much of a paperwork challenge as a mortgage used for purchase. Homeowners must provide documents that prove creditworthiness and ability to repay as well as proof of adequate homeowners insurance and any improvements they’ve made since they purchased the home.

Suppose they are asking for more than 80% of the current value of their home. In that case, they may need to provide documentation proving they will be using the funds for home improvements that will increase the property value, such as estimates from a contractor. If they will use the refinance to consolidate debts, help the homeowner craft a statement to that effect in case the debt-to-income ratio might affect their loan terms.

Ensure your borrowers have gathered everything they need before you submit the application so they won’t lose out on a lower rate due to missing information.

Schedule the Appraisal

Unless the homeowner recently purchased or refinanced their home, it will likely need an appraisal. Make sure that it gets scheduled quickly and that the borrower is available when the appraiser can visit the house. This way, the chosen lender gets the correct market value to assess whether your borrower can borrow what they need.

Help homeowners understand what they should do to prepare for the appraisal, such as tidying up the home, cleaning up the landscape, and completing any minor repairs. Also, confirm they have copies of their home improvement and maintenance records handy in case the appraiser has any questions.

Work with the Homeowner on Loan Adjustments Quickly

If the appraisal comes in lower than expected, be prepared to help the homeowner quickly adjust their plans. You might discuss the options with the homeowner, such as planning for a cash-in refinance or lowering the amount they hope to borrow.

Prep for Closing

Although closing on a refinance is faster than a purchase loan, it’s important to ensure your borrowers are ready to review the final loan and payment terms so you can complete the loan quickly. At this point, remind them that the faster they do this, the faster they get the cash they need.

Get more insights into the housing market on the EPM blog.

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