Mortgage rates have only been dipping lower and lower these past few weeks ever since the sudden economic dip last August. A month later, rates are still going down making this the perfect opportunity for home buyers and refinancers to avail of extremely low mortgage rates. Last week the benchmark 30-year fixed mortgage rate fell to a record low of 4.35%, allowing borrowers to pay off their loan in half the time they initially planned for.
Because of the continued low rates many home owners are now seeing the opportunity to refinance, causing a sudden increase of refinance applications. This increase in the volume of applications leave some lenders scrambling to keep up, processing loan requests longer than they usually do. Instead of taking 15-30 days, refinance loans are getting approved within a 45 to 60 day margin. Because of this, any lack of documentation on the borrower’s part could cause a major set back in the process potentially losing the opportunity of locking in those juicy rates. As a borrower in these times, it’s important to stay on top of the game by taking note of these 3 tips:
1. Prepare all Documents – When applying for a refinance loan, make sure you’ve got everything you need all in one go. This includes paystubs, W2s, bank statements (including all pages) and tax returns. Once you see a rate you’re comfortable with, immediately submit these documents to your lender within a day.
2. Keep Frequent Communications – It is possible for underwriters to ask for more documentation and it is best to keep in constant communication with your lender so you will know what to prepare without having to wait for their call. It is reasonable to check in with your application once or twice a week, doing so will remind your loan officer about your application, making sure its not left underneath a pile of other loans.
3. Establish Expectations - Before even beginning the refinance process, it is important to ask your lender just how long the documentation is expected to pull through. Borrowers should ask lenders the time frame in which they expect to close the loan and lock their rate. Usually borrowers lock rates for 30 days in the hopes the loan will close within this time. However, this time frame is no longer feasible and refinances usually takes at least 45 days. It is best to lock in a rate for at least 45 days to eliminate extra fees to extend the rate.
There really is no telling for how long these low rates will last. Instead of waiting for rock bottom, it is best to act quickly and apply for refinancing while its still early to do so.