It's Been a Few Years Since I've Purchased or Refinanced a Home, What's New in the Mortgage Process?

By, Mike Carney, Sr. Mortgage Banker

For anyone that hasn’t purchased a home or refinanced their current home recently, several changes have been implemented to the mortgage process that you should know.

Significant increase in government regulations. Depending on how long it’s been since you last applied for a mortgage, there are significantly more government regulations.  Many of the changes are a result of the Dodd-Frank Act. These new regulations are aimed at preventing a lot of the reckless lender behavior that created the housing bubble that occurred a few years ago.

Significant increase in documentation needed. If you are considering applying for a mortgage soon, start planning now.  You are going to be required to furnish your lender with full documentation.  That includes, but not limited to, tax returns, W2’s, paystubs, bank statements, proof of current housing expense, etc.  Remember that your loan can only be processed as quickly as you furnish your lender with the documentation they request.  And contrary to popular belief, lenders don’t arbitrarily request documentation; there’s a reason why you are being asked to supply items.

Longer processing times. All of the changes we’ve implemented have resulted in longer processing times and consequently, longer closing times.  While 30-day settlements were commonplace in years past, today it’s more likely to see 45 or even 60-day settlements.  While some situations that delay settlements are unavoidable, many can be avoided simply by planning ahead and being prepared.

If you’d like more information about Apex’s current mortgage process contact me or download our 7 Steps to Settlement flowchart. We’re committed to closing clean and on time, every time which is why we believe communication is key. We keep our clients informed each step of the way, and like to be upfront about our steps to settlement and what you can expect from the process.

Reasons Why You Should Consider Refinancing Your Mortgage

Refinancing a mortgage is a golden opportunity to lock in today's low interest rate for the next 15 or 30 years. While interest rates now are still low, there's a good chance they will be heading up in the coming months.

The Fed won't maintain the current bond purchasing level forever, and just as rates spiked in September when the Fed hinted the bond purchasing would change, rates will spike even more when purchasing levels actually do change.

As interest rates remain very low for 30-year and 15-year mortgages, homeowners can benefit greatly from a refinance. Several types of people in particular should consider refinancing.

Carrying A High Rate

Anyone with an interest rate well above today's level should think about a refinance. Unless the homeowner is planning to sell within the next few years, a refinance will almost always save money in the long run if the rate can be lowered by at least a percent.

Switching From FHA To Conventional

Given that FHA mortgages now carry mortgage insurance premiums for the life of the loan, it makes a lot of sense for borrowers to switch away from them when they can. Refinancing may be possible once the homeowner has built up enough equity to qualify for a mortgage from a traditional lender, without the burden of mortgage insurance.

ARM Coming Up On Adjustment

The low rate of an adjustable rate mortgage sticks only for the first few years of the mortgage. After this point, the rate adjusts each year based on market trends.

Rather than paying the adjusted rate, which is almost always higher, homeowners can refinance into a new fixed rate mortgage to lock in one of today's low fixed rates for the duration of the mortgage.

Cash Out To Consolidate Debt

Homeowners carrying high-interest debt, like credit cards and personal loans, can often benefit from consolidating it into their mortgage. As long as they maintain at least 20 percent equity in their home, they can get a cash-out refinance for an amount higher than their current mortgage balance.

They can then use the difference to pay off high-interest debt. For more information about refinancing your mortgage feel free to contact your trusted mortgage professional.