YOUR MORTGAGE : How to Speed Up Process of Refinancing
If you’re like many homeowners, you’re thinking about refinancing your current mortgage to capitalize on some of the lowest interest rates in 20 years.
And if you have already contacted a lender to discuss your plans, you probably already know that you could be in for a long wait: Many bankers say that it’s taking between 30 and 60 days to refinance a loan today, nearly twice the normal time.
The delays are understandable. Refinancing is expected to account for a record $400 billion in business this year, according to the Mortgage Bankers Assn. of America.
Nearly half of all loans made today are being used to refinance existing mortgages, up from 30% last year and just 16% in 1990.
Fortunately, you and your loan application don’t have to drown in the “refi wave” that’s washing across the nation: Lenders say that borrowers who follow a few basic guidelines can trim days or even weeks off their loan-processing time.
“There’s really no one single thing you can do to knock a couple of weeks off your processing time,” said Robert Sheets, a loan broker and owner of Golden West Mortgage in Canoga Park.
“But there are a lot of little things you can do that will eventually save you--and us--a lot of time and aggravation in the long run.”
Before you even visit a lender, Sheets suggests, order a credit report on yourself from TRW or some other credit bureau. You’ll find them under the “credit reporting agencies” heading of your local Yellow Pages.
For about $10, the bureau will send you a computer printout that’s much like the one that your lender will order when it’s trying to establish your creditworthiness.
If there’s a discrepancy on the report--for example, a department store that says you missed a payment on that refrigerator or lawn mower you bought a few years back--contact the creditor and resolve the matter immediately.
“Even people who think that they’ve got a spotless credit record are sometimes surprised at what’s on their report,” Sheets said. “Clearing up any problems now will help you avoid unneeded delays later.”
Also gather up all the financial records the lender will want to see.
In general, this includes copies of your last two tax returns and W-2 forms, a payroll statement showing how much money you have earned so far this year, and statements showing how much you’ve had in the bank for each of the past three months.
“We’re probably going to want a complete tax return,” said Kerry Webster of Trinity Mortgage, a mortgage-banking firm in Woodland Hills.
“If you list income from rental property or a business on your loan application, we’re going to want to see the various tax schedules you filled out. A simple (Internal Revenue Service) 1040 form won’t do.”
It’s always wise to call at least a half-dozen lenders when you’re looking for a loan; talking with a dozen is an even better idea.
Although you may have to call each financial institution several times before you finally link up with a busy loan officer, your persistence can be rewarded with a mortgage loan that carries unusually good terms.
Local realtors are often good sources of information about various lenders because they’re constantly lining up financing for their clients.
Some experts say that having an agent introduce you to a lender can also ensure better service, because the loan officer will want to keep the realtor’s future business.
But other experts say that depending solely on a realtor’s referral is a mistake, because the lender he recommends might not offer the best terms.
Regardless of how you compile your list of potential lenders, make sure it has a good mix of banks, mortgage brokers, mortgage bankers and savings institutions so you can see who offers the most competitive financing package.
It’s a good idea to call all of these lenders on the same day. Rates have become so volatile lately that they can swing more than one-quarter of a percentage point within a matter of hours.
“Rates might go up tomorrow, or they might go down,” said Olga Moreno, a mortgage broker and owner of Bona Fide Financial in Pasadena. “If you’re calling different lenders on different days to see what rates they’re quoting, you’ll be comparing apples to oranges.”
Discuss all your borrowing options with each lender to find the loan that best fits your personal financial situation and future home-buying plans.
For example, if keeping your initial monthly payments low is your chief concern, you might want to avoid today’s tempting fixed rates and instead refinance with an adjustable mortgage that has an even lower introductory rate.
Or, if you plan on selling your home relatively soon, you might want to choose a “balloon” loan that’s due in five or seven years.
Rates on balloons are sometimes more than a half-point lower than rates on standard 30-year mortgages because their shorter pay-back schedule reduces the risk that the lender will lose money if rates skyrocket in the future.
“If you choose one type of loan and then change your mind after we have processed your loan and typed up all the paper work, you’ll delay your closing and you might be charged for the extra work we have to do,” said Scott McAfee of Security Pacific National Bank.
Of course, it’s imperative that you fill out your loan application completely and accurately.
“Incomplete and inaccurate loan applications are probably the single biggest cause of processing delays,” Webster said.
“For example, if you don’t put down the full address of your employer, or if you don’t give the number of your bank account, we either have to call you and get the information or try to look it up ourselves. Either way, it wastes a lot of time.”
Many borrowers like to call their mortgage broker or loan officer several times a week to see how their loan paper work is progressing. But lenders say that’s a bad idea: They’re already swamped, and multiple calls add even further delays.
Worse, if you’ve been making lots of unnecessary calls and then have a truly important question to ask, the lender won’t be too anxious to get back to you because he won’t realize that it’s urgent.
Lenders aren’t the only people working overtime these days: So are appraisers.
As a result, you’ll want to make sure that you’re home when the appraiser comes to check out your house.
“Most appraisers won’t enter a home if no one is there, or if there is only a minor present,” said broker Moreno. “If you miss your first appointment, it’ll take another week or two to line up another one.”
Moreno said there’s another reason why you want to be at home when the appraiser comes to call: Your presence gives you an opportunity to point out any improvements that you have made and “talk up” the property’s value.
“Lenders prefer making loans to people with lots of equity, because they’re less likely to default,” Moreno said.
“If you can convince the appraiser that your home is worth more than your neighbor’s because of its special features or great condition, you’ll improve your chances of getting the money.”
Other tips to speed the refinancing process:
* Consider filing your 1991 tax return immediately, especially if you earned a lot more in ’91 than you did the year before. “The more you earned, the better chance you have of getting the loan,” banker Webster said.
* If your title to the property is “clouded” by a mechanic’s lien or some other problem, take steps to clear it up now. Resolving title disputes can be a time-consuming task, and banks won’t lend money on property where the ownership appears suspect.
* Deliver your loan application and other paper work in person instead of using the mail. “That can save you several days right off the bat,” said Samantha Davies, a spokeswoman for Home Savings of America.
Biggest Lenders to Home Buyers
Following are Southern California’s biggest lenders to home buyers during all of 1991, with the top 40 ranked by dollar volume.
Rank Lending Institution Loan Dollar Average Count Volume Loan 1 Bank of America 9,255 2,081,775,563 224,935 2 Home Savings 9,380 1,701,930,022 181,442 3 Great Western 12,033 1,652,371,862 137,320 4 Directors Mortgage 8,851 1,200,372,835 135,620 5 Plaza Funding 6,867 1,160,866,211 169,050 6 World Savings 6,224 1,122,655,224 180,375 7 Countrywide Funding 5,801 971,488,128 167,469 8 IMCO Realty Svcs 5,600 881,559,508 157,421 9 Sears Mortgage 3,387 877,625,140 259,116 10 American Savings 5,201 867,169,098 166,731 11 California Federal 3,315 694,634,552 209,543 12 Western Federal 3,339 649,306,411 194,461 13 Security Pacific 3,363 613,126,620 182,315 14 Citibank 2,479 593,281,287 239,323 15 Weyerhaeuser Mtg 2,938 458,029,942 155,899 16 Glendale Federal 2,235 429,545,205 192,190 17 Coast Fed Bank 2,472 427,972,442 173,128 18 United Savings Assn 2,901 400,470,411 138,046 19 GMAC Mortgage 2,296 386,638,897 168,397 20 American Res Mtg 2,269 372,462,180 164,153 21 First Franklin Fina 2,133 344,563,126 161,539 22 Western Bank 2,646 341,199,087 128,949 23 Prudential Home Mtg 1,205 326,217,488 270,720 24 Franklin Mtg 1,834 323,589,488 176,439 25 First Nationwide 1,663 320,796,758 192,902 26 First California Mt 2,136 312,021,459 146,077 27 Funders Mortgage 2,060 292,458,715 141,970 28 Chase Home Mtg 742 282,467,480 380,684 29 Imperial Bank Mtg 1,577 269,094,973 170,637 30 RSL Mortgage 1,539 266,900,206 173,424 31 HomeFed Bank 1,513 238,268,600 157,481 32 Western Ctys Mtg 1,705 233,549,460 136,979 33 First Federal S&L; 1,200 226,788,350 188,990 34 Great American 1,444 226,627,539 156,944 35 GN Mortgage Corp. 1,221 223,974,850 183,436 36 Chase Manhattan 406 209,451,436 515,890 37 PSF Mortgage 1,309 205,297,153 156,835 38 National Pacific Mt 1,455 203,290,034 139,718 39 Accubanc Mtg 1,418 199,603,450 140,764 40 Cambridge Capital 1,141 187,559,250 164,381 Other 104,029 16,237,231,018 156,084 Total 234,582 39,014,231,458 166,314
SOURCE: The Dataquick Report (714) 867-7656
