Jonathan Carter

7 Refinance Timing Secrets

How to help your broker
snag you the lowest interest rate.

Your speed and skill in playing the refi game can save you money, and helping your mortgage consultant can push your application through the process with timing that will land you a lower interest rate.

If you are a seasoned interest rate watcher, you will have recognized that interest rates drop slowly, and often with a great deal of anticipation.  But they rise very quickly.

On a recent drop (mid-March) interest rates were at a 40-year low.  A record number of mortgage applications flooded the nation's lenders, jamming phone lines and overwhelming loan officers.  The backlog meant delays in processing - and when interest rates bounced back up by half a percent, some applicants closed with a contract that left them with a higher payment than they had anticipated.

Here are the inside secrets that will help you get the attention you need:

1. Have your paperwork ready.  Most lenders will ask for pay stubs, W-2 forms, last year's tax return, bank and brokerage statements, mortgage statement, record of any home equity loans or lines of credit, and a homeowners insurance statement. (See Documents Requested).
    

2. Use a broker.  If you have troubled credit, an unusual financial situation or are just overwhelmed by the process, it can pay to have an advocate who knows the system to help you sort through your options.  They are there to help you get all the paperwork done, and done right.
   
   When there is a rush for lower rates a good mortgage broker can really earn their keep.  First, brokers do business with many different lenders and often have an inside track that can help speed up the process.  When they are doing high volume business with their preferred lender, they get preferred treatment as well.  Second, mortgage brokers tend to be more entrepreneurial.  Because their income is dependent on your loan placement, they are more inclined to find a way to get your application through the process.
    

3. Do your footwork ahead of time.  Understand the basics of how refinancing works and what various terms mean before you apply.  Spend some time on this site to become familiar with specific and general concepts about mortgages. 
   
   Meet with your mortgage consultant to discover what will be your best mortgage solution.  Match your objectives with the features of the products available, such as 15-, 20-, 25-, or 30-year terms; fixed or adjustable interest rates; and whether or not you are willing to "buy down" your rate if that is available.
    

4. Don't try to hit the absolute bottom.  It is virtually impossible to hit the exact bottom.  If you put the effort in to preparing for a loan, your hesitation to act while waiting for interest rates to dip just a little further is likely to cause your mortgage broker to lose interest in helping you.  Then at the exact moment you want to lock, you may find they are busy with other applications.
    

5. Ask about shortcuts.  Some lenders have an incentive to speed up the process, especially if they don't get paid until the loan is complete.  Some possibilities are:
   Loan Modification.  These programs basically lower the rate on your existing loan without changing the length of the loan.  Loan modifications aren't available to most borrowers, but it never hurts to ask.
   Streamlining. Some lenders offer a quick refinancing for current customers.  You may pay a slightly higher rate for the convenience and speed, so be careful about your options.
   Reduced Paperwork.  Most "low-doc" or "no-doc" loans charge a higher interest rate but require little or no income documentation.  These can be ideal for self-employed business people.  However, these products can also be  available at competitive rates to those with excellent credit.
    

6. Use the internet.  Not only are you able to arm yourself with facts and information on the internet, but you can also begin the application process even before you meet with your mortgage consultant.  The convenience of gathering paperwork and filling out the application online will save you time, and can even save you money.   By the time you call to set an appointment, your financial paperwork can already be in a streamlined process.
   
   During some of the busiest periods, applicants that applied online and scheduled their appointments on the internet were able to bypass busy switchboards and traffic jams at the front desk.
    

7. Follow up and follow through.  Fax, overnight or hand-carry to the lender any paperwork that's requested.  Don't wait for regular mail and certainly don't put off responding to requests for more information.  Even short delays will send the wrong message.
   
   Keep the heat on by calling or emailing your loan officer every few days until your loan is approved.  Be polite and friendly, but make it clear that you want the process to go as quickly as possible.  When you show that kind of initiative, your consultant will respect your needs and do whatever they can to expedite the process.