Refinancing a mortgage should be a fairly straightforward process. In this market, however, it has become increasingly difficult to pin down the real value of a home. Disagreements between borrowers and lenders over home value are a leading reason why refinances aren’t approved. Here are some ideas that will keep you everything above board for you and your lender.
Don’t rely on a cursory valuation of your home from the Count Assessor
Your home’s value should be on public record. This is the value your community assessor places on your home for tax purposes. This value is worthless if you are trying to refinance.
Banks employ the market data analysis comparison—same as real estate agents—to calculate your home’s value. The count assessor’s value is simply a quick and easy way to levy taxes, and does not, in most cases, reflect the actual value of your home.
Don’t dally with the documents
As burdensome and time-consuming as the refinance process may be, it is crucial you get everything in writing and read thoroughly. Failure to do so could cost you the refinance OR put you in a position where you are paying more than you hoped.
Rates are ever changing, moved by the oft-volatile forces at play on Wall Street. When a loan officer tells you a loan is locked in, you want the conditions of that locked-in rate in writing. It may be that the locked-in rate is only temporary.
It should be fairly obvious that you need to read everything in your loan application before signing off. Request that the documents be sent to you before the loan refinance-signing day. Be sure to read for irregularities and unfavorable terms in prepayment penalties, the Good Faith Estimate and adjustable rate mortgage-loan riders. If you see things you don’t like, be prepared to ask your bank for better conditions.