If you're thinking about refinancing to take advantage of current mortgage rates, be prepared to wait longer for your closing than you would have a few years ago. Thanks to new lending rules, high demand, and greater lending scrutiny, the refinance process can take more than 60 days.
Here's why and what you can do to streamline the process.
New Appraisal Rules Affect Mortgage Lending
New rules for home appraisers -- called the Home Valuation Code of Conduct -- went into effect this year to prevent real estate agents and mortgage brokers from influencing appraisals. Now only lenders can work directly with appraisers and, as a result, most are contracting with national appraisal management companies. Critics say the change has increased turnaround times and that some of the appraisers don't know the neighborhoods well. There's nothing you can do to influence the appraisal, but if you're worried about whether you'll have enough equity to qualify for refinancing, check recent sales in your area to get a rough idea of how much your home is worth.
Refinancing: Lenders Apply More Scrutiny
Lenders are requiring more documentation than a few years ago. Be prepared to submit copies of documents such as W-2 forms from the last two years, deposit account statements from the past three months, and your most recent pay stub. If you're self-employed, gather the previous two years' federal income tax returns with all schedules and a year-to-date profit and loss statement. See the complete list of documents you'll need to apply for a refinance mortgage, and gather the paperwork beforehand to streamline the process.
Best Mortgage Rates Only for Best Credit Scores
With tightened credit, only applicants with excellent credit scores -- 720 and above -- may qualify for the best mortgage rates. Know where you stand before you go shopping. Get free copies of your credit report and pay a small fee to learn your credit score. Regardless of your credit history, get customized refinance mortgage rates to find the best deal, and use HSH Associates' interactive refinancing calculator to see if refinancing makes financial sense for you.
About the Author
Barbara Marquand is a freelance writer who writes frequently on business and financial topics.
