7 Things NOT to do When Applying for a Home Refinancing Loan
Ever wonder what the loans officer is thinking on the other side of the desk while you’re sitting there, looking to refinance your home? What criteria do they use to judge whether you even have a chance at getting some money from them?
The following is a list of things not to do when you are seeking to refinance your home. In fact, they will seriously hamper any chance you once might have had with the lender, so be sure to read and follow these points carefully!
- DO NOT buy or lease a vehicle shortly before applying to refinance your home. Most lenders tend to look very carefully at your debt-to-income ratio. Any large payments such as a car lease or loan can greatly impact those ratios; enough to prevent you meeting the lender’s qualifications.
- DO NOT move your assets from one bank account to another (especially not with another lender). Any such transfers will show up as new deposits on record, and only serve to complicate the application process. The reason for this is that you must disclose and document the source of funds for each new account you open in your name. Instead, your lender should verify each of your accounts as they currently exists, and you can consolidate your accounts after your refinance loan has been approved if you need to do so.
- DO NOT have a recent change of employment! Most new jobs usually involve some sort of probation period which must be satisfied before the income from your new job can be taken as actual income for the purpose of qualification.
- DO NOT buy any new furniture or any large appliances right before applying for a refinancing loan. Especially, do not do so on credit of any sort. If the new furniture cost increases the amount of debt you are responsible to pay on a monthly basis, it is quite possible that this may disqualify you! At the very least, it will dramatically reduce the amount of money you will be able to borrow to refinance.
- DO NOT run a TRW, Experian, or Equifax credit report on yourself right before applying. This will show up as an inquiry credit report. At the very least this will prompt the prospective lender to possibly ask a lot of uncomfortable questions. Any official inquiries by lenders must be explained and backed up in writing.
- DO NOT attempt to consolidate your bills or debts before speaking with your bank about refinancing! Your banker is quite qualified to advise you on whether or not this needs to be done. Often, there are better ways to make your payment structure work that do not include consolidation.
- DO NOT pack or ship information you might need for the loan application. This applies to nearly everyone. There are certain forms and other important paperwork (i.e. W-2 forms, divorce decrees, and tax returns) which should not be sent with your household goods (if you are in the process of moving) or packed somewhere and forgotten. Keep all these documents handy! Duplicate copies can take anywhere from a couple of weeks to several months to obtain, and can slow the entire refinancing process down to a crawl.
Following these 7 pointers can give you a much greater chance of getting your home refinancing loan with as little hassle as possible. And always talk to your banker and ask for their advice!