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REFINANCING
Mortgage market conditions since the early part of 2007 have deteriorated substantially. We are no longer able to offer loans to borrowers with credit scores under 620. In addition, there is no more 100% financing. The maximum loan-to-value available is 97% and that is only for borrowers with good credit ratings. Loan pricing and availability is now largely determined by the borrower’s credit score, so it is imperative that every effort be made to maintain as high a score as possible (see the “Improve Your Credit Score” section nearby).
1. Shop Around
Your current lender may not have the best rates and programs. Believing
it’s easier to work with your current lender is a common misconception.
In most cases, they'll require the same documentation as other lenders
and mortgage brokers. This is because most loans are sold on the secondary
market and have to be approved independently. Even if you've been
making timely payments to your existing lender, they'll still have
to process the verifications all over again.
2. Do a Break-Even Analysis
Determine the total transaction costs and how much you'll save each
month by lowering your monthly mortgage payment. Divide the transaction
costs by the monthly savings to determine the number of months you'll
have to stay in the property to recoup your refinancing costs. Buckeye
Mortgage will be pleased to provide an analysis for you.
3. Get a Written Good-Faith Estimate of Closing Costs
Within 3 working days after receipt of your completed loan application,
your mortgage company is required to provide you with a written
good-faith estimate of closing costs.
4. Using the County Tax Assessor’s Value as the Market
Value of Your Home
Mortgage companies do not use the county tax assessor’s value
to help determine if they'll originate your loan. They, like real
estate agents, usually use the sales comparison approach. A new appraisal,
usually costing $250 to $300, will be necessary if the prior one is
over six month old.
5. Don’t Sign Documents Without Reading Them
Do not sign documents in a hurry. Review the documents you'll be signing
before the closing, including a copy of all loan documents. This
way, you can review them and get your questions answered in a timely
manner. Do not expect to read all the documents during the closing,
as there is rarely enough time to do that.
6. Providing Your Mortgage Company With Documents in a Timely Manner
When we ask you for additional paperwork--get cracking! We're trying
to get you approved! If you don't quickly respond to our requests,
you could end up paying higher rates should your rate lock expire.
When a mortgage company tells you they've locked your rate, get a
written statement detailing the interest rate, the length of the rate
lock, and other particulars about the program.
7. Drawing Against Your Home Equity Credit Line Before You
Refinance Your First Mortgage
Many lenders have "cash-out" seasoning
requirements. If you draw against your credit line for anything other
than home improvements, they'll consider your first mortgage refinance
transaction a "cash-out' refinance. This creates stricter lending
requirements and can, in some cases, break your deal!
8. Getting a Second Mortgage Before You Refinance Your First Mortgage
Many mortgage companies look at the combined loan amounts (i.e., the
sum of the first and second loans) when you are refinancing only
your first loan. If you plan on refinancing your first loan, check
with your mortgage company to see if having a second loan will cause
your refinance to be turned down.
Buckeye Mortgage Company specializes in refinancing residential mortgages!
Serving
West Virginia & Ohio
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