Three C's to protect yourself in an up rate market

December 16th, 2010

In periods such as this when mortgage rates are rising how can you ensure that you will get the mortgage rate you locked in? Depending on when you applied for your mortgage the rates today could be as much as a half or three-quarters percent higher than when you locked or used mortgage calculators to determine when to make your application. Here are three C's to follow to close your refinance mortgage or new home loan before your rate lock expires.

Current

Make sure your mortgage application file has current evidence needed to verify your income and assets. During your mortgage process when you get a paycheck send a copy to your mortgage professional. Most underwriters will require paystubs within 30 days of closing, or your most recent one. Rather than waiting for an underwriter to request it, and have more time go by as you get closer to your rate lock expiration, be proactive and send your current paystubs when you get them.

The same applies to your bank accounts or other asset accounts where you may be getting funds for closing. When a new statement arrives copy all pages (note all pages, if the first page says "Page 1 of 4" copy all four pages) and send to your lender. If there are any large or unusual deposits on your statements be prepared to source the deposit and provide evidence where the funds originated. These are questions an underwriter will ask, again being proactive will ensure the underwriter has information before he or she asks for it.

Cooperate

Some requests from your lender for information may seem unusual or not necessary. Perhaps the request is to increase your insurance coverage despite your having the same policy in place for many years. Perhaps the request is to provide evidence a large deposit came from your on-line trading account. Whatever the request there is a reason. Instead of debating the reason for the request or what is wanted by your lender, cooperate and provide what is being asked for.

While such requests can be frustrating, especially after your application has been in process for a while, debating reasons and not cooperating with the requests can delay the approval of your mortgage and put your rate lock at risk.

Communicate

Communicate regularly with your mortgage professional. Touch bases once a week to ensure your file is progressing, to update information such as asset statements or paystubs and to keep your file on his or her 'to-do' list. There can be a fine line between good communication and being a pest.

Checking in to see if there is any information needed or to say you are sending a copy of your bank statement with a brief call or email is more appropriate than lengthy calls inquiring why your file has not been approved, what is taking so long, why some information is being requested. Communicate regularly and professionally so you become your mortgage professional's favorite client.

As your rate lock deadline approaches ensure your mortgage professional has current information, a cooperative client and good communication with you to reduce the risk of you losing your rate lock.

Unless you have current paystubs and bank statements, you cooperate with requests for information and you communicate appropriately with your lender (the three C's), you can expect to re-run your mortgage information in the refinance calculator or prequalification calculator with higher rates than when you locked in your now expired rate.

Posted By :
Dennis C. Smith is co-owner and broker of record for Stratis Financial in southern California. He has over twenty years' experience in the mortgage industry.

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