Refinancing your home or getting a new mortgage to purchase a home is always a nerve-wracking process. People are always nervous about getting the lowest mortgage rate and best fees from their loan officer. People hate those last minute surprises that will pop up as a last minute “condition” from the underwriter. But truth be told, there are steps that you can take that will help your loan officer make the loan application process go as smoothly as possible. While every home loan is different, there are steps that you can take to make sure your experience is as positive as possible.
Here are my suggestions:
1. Know that this is not 2006. There have been lots of changes in the mortgage industry since what I would call the “Wild Wild West”. All loans require documentation for everything. To refinance your Utah home, the underwriter — the person who will be reviewing your file — will want to see paperwork on your financial history. This isn’t your loan officer who wants to see these documents, it will be the underwriter who has to follow the protocol that has been set by their company. The company that will be providing you with funding only wants to make sure that they can resell your loan if that is their goal. They have guidelines from Fannie Mae and Freddie Mac they are required to follow. If you are completing a FHA streamline refinance, there may be documents the underwriter requires. The loan will also take more time to complete. During the heyday of the Wild West, loans could be closed in 24 hours in some cases. Now, the industry suggests that you project a month to close a loan from start to finish.
2. Do your homework before starting a loan application. There are several pieces of information that you will need to collect before you start a mortgage application. What is your home worth? You can find Utah home values at Zillow.com (click here). While Zillow isn’t 100% accurate, it does give you a good idea of the value of your home. An appraisal that is ordered by the company that will underwrite your mortgage will determine the final value. You should also order a free credit report from one of the credit reporting agencies to determine if there are any items that have been reported in error or if there are items you need to clear up like liens and judgments. You should also find the best mortgage company to work with. Talk with several and find a loan officer that you are comfortable working with. I suggest you talk with your family and friends, get some referrals, and do your homework on each. Check the Utah Division of Real Estate website (click here) to determine if the loan officer is licensed or if they have any disciplinary actions pending against them. The Utah DRE has some great resources for this.
3. Gather your paperwork before starting your application. As a former loan officer, I appreciate clients who are prepared with their paperwork. You will need to provide lots of paperwork to demonstrate your viability as a borrower and remember, it isn’t your loan officer that requests this information. Everyone who will be on the loan will need to provide documentation related to income and assets. You will probably need the following:
- Your two most recent pay stubs.
- The most recent statements related to your assets — bank statements, brokerage account statements, and 401K and IRA statements.
- If you have judgments or liens, bring paperwork demonstrating that you paid those and when.
- If you have an American Express, bring in your last statement. They are notorious for reporting the amount you owe as your monthly payment.
- Any divorce decrees and up to date information related to child support and alimony
- If you are paid by commissions or claim income on your application from a 1099 or K1, you should bring a copy of your income tax returns from the last two years and provide those to your loan officer.
- If you are self-employed, you may need to provide a copy of the tax returns from your business from the last two years.
- Photo ID from a state agency.
4. Meet with your loan officer. Sit down and meet with them face to face. You should make sure you talk rates with them. A great loan officer will allow you to make the decision when to lock your rate. That means you are in the driving seat as to what rate you end up with. Discuss your loan preferences with them and let them know up front what type of loan you are looking for — a 30 year fixed rate loan, a 15 year fixed rate loan, or some type of adjustable rate mortgage (ARM). My suggestion is to use a 30 year fixed rate loan and pay extra each month to shorten the term of your loan. Ask them to explain any charges that you will be responsible for if you do not end up closing the loan. Those should only include: a completed appraisal and your credit report. Don’t pay any processessing or underwriting fees up front. You should also tell them how often you expect to hear from them and how. Make sure progress is being made on your loan.
Refinancing your home in Utah is not difficult and can save your family money. There are plenty of Utah mortgage companies that will do a good job for you, but very few who will provide you with the service and rate that you deserve. Make sure you search for that company and find the right loan officer to work with. If you think there is something funny going on during the process, read my article titled “When Do I Ditch my Loan Officer?” to find tips on how to make sure your loan officer is doing their job correctly. If your loan officer ever suggests doing something that seems out of the ordinary like I explained in my article titled “Mortgage Fraud“, make sure you run — not walk — away.