What to Consider When Applying for a Loan or Refinance

1. Switching jobs or accepting a promotion can affect your ability to get a loan or refinance

It may seem like a no-brainer to take a raise or job with more money, but the transition may offset the required job history and affect your ability to get the loan. Even the same job with new location and more money mid process can result in a major delay.

2. Quitting your job is also a no-no

Wait until after you have the keys. The lender will verify employment and check your credit one last time on the day of closing.

3. Local lenders are often more responsive than national ones

If you want to make a successful offer, you have to think about everything that can make the offer more appealing. A good local lender can impact the offer’s success. Fremont Bank has amazing loan officers who pay attention to details. Fremont Bank is a good example of a responsive local lender, with zero closing costs.

4. Closing at the end of the month may result in less upfront costs

If you close at the beginning of the month, you will be responsible for pre-paying interest for the remainder of the month, since mortgages are paid in arrears. This means that if you close on Dec. 1, you will be charged for 30 days of interest up front. If you close on Dec. 27, you will be charged for 3 days of interest up front.

5. Big purchases can affect your loan or refinance

You may be getting a great deal on that washer and dryer, but purchasing furniture or appliances on layaway can result in a lower credit score. It may also offset your debt-to-income ratio. Purchasing the items with cash can result in lower reserves, which the bank may require to prove your home purchase will not be a hardship. Always talk to your lender first.

6. Avoid a big purchase or a new credit card

Right before you close, the lender will do a final check on outstanding debts and credit inquiries. Any new debt could present a problem, so hold off on buying new furniture or applying for a credit card while waiting to close.

7. Avoid any open disputes on your credit report

Lots of people find erroneous information on their credit reports and dispute it, but if you are applying for a mortgage, think twice. After you file a dispute, the creditor has 30 days to respond. Lenders usually won’t approve a mortgage until the dispute is removed.

8. Think twice about appealing an appraisal that’s lower than the purchase price

Since the subprime mortgage crash of 2008, the recession and subsequent financial reforms, there is much tighter regulation of the appraisal process. Gone are the days when homes automatically appraised for the purchase price offer. In a competitive market where many homes receive multiple offers, it’s not uncommon for the appraisal to come in lower than the winning offer. If the appraisal comes in low, you can appeal the appraisal or the parties can renegotiate the contract. Either of those options will require more paperwork and potential delays. Because an appeal involves paying for another appraisal and there are no guarantees of success, many buyers and sellers choose to negotiate the contract instead.

9. Closely monitor the status of agreed-upon repairs

Whether it’s a termite problem or a new water heater, repairs can cause delays if not negotiated and executed properly. Any repairs the seller agrees to complete must be done satisfactorily before the buyer and lender will close a deal. Sometimes sellers and buyers will go back and forth for weeks about repairs to the property. If it was an issue flagged by an appraiser, now the appraiser has to go back out and verify that it’s been done.

10. Be sure the title company checks for problems prior to escrow

Most of the time, the title company will uncover and resolve any outstanding liens or other problems with the title long before escrow. But if not, problems can arise. If a title company does not pull a pre-escrow [report] prior to the property coming on the market, then a ‘surprise’ lien, even as small as a garbage lien, can cause delays.

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