With the housing market going gangbusters over the last year or so, many people are buying, selling and/or refinancing their homes. With the current state of the real estate market, there are several pitfalls you want to make sure you avoid. I sat down with Marne Renn, Regional Home Lending Manager at IncredibleBank, to learn about some common things to watch out for when refinancing or getting a new mortgage
1. Going with an Online Bank
With interest rates at all time lows, there is a “race to the bottom” to find the lowest rate possible. Be careful when dealing with online banks or online mortgage companies and what they are advertising. You may see a lower rate, but they don’t show you the significant fees associated with getting that rate. Often times, you must pay to buy down that rate listed which is not disclosed, so be sure you speak to someone who is very transparent about the process.
2. Changing jobs during the loan process
That is never a good idea if you can avoid it. Loans are based on income and any kind of change like that the bank will complicate things and take longer to process. Do not buy a car in the middle of the loan process. Again, it changes debt to income ratio, and other factors that will cause a delay or lengthen the process. Because buying a car takes a lot of paperwork, it is VERY difficult to make copies of and send the dozens or hundreds of pages to the loan department.
3. Divorces
Using a quit claim deed during a divorce to the spouse, however the mortgage does NOT disappear. The spouse who is going to remain in the home MUST refinance the home to remove the name of the ex-spouse. It is ok to start the process of refinancing during the divorce, but the divorce must be finalized, or settlement signed, before closing on the refinance of the house.
4. Unemployment Income
Unemployment income does not count towards income when refinancing or getting a mortgage. Income only counts when you can provide proof of employment and a paystub from that employer.
In general, whoever you work with make sure they are responsive! Make sure they get back to you within 24 hours. If they do not, that may be a sign of the kind of experience you will have. It is important to check out the bank you work with, what services do they offer (Checking/savings/online statements, etc.), and what is their reputation. There is a misconception that you need to have a certain type of home loan, like a FHA, or VA loan. If you go in thinking that you need to have an FHA loan, it may not be right one for you. Tell your mortgage lender how much you can pay per month to feel comfortable, and then the lender can source the appropriate loan….it is not about how much home can I buy but rather what monthly payment am I comfortable making.
Marne Renn is a Regional Sales Manger at IncredibleBank and has over 15 years of Mortgage lending experience and handles all different loan types from USDA, VA, FHA. Conventional, Construction Loan, Vacant Land Loans, and Camp Loans. Marne has a true passion for home lending and enjoys working with customers on their home lending needs and has a long track record of success in the industry.
NMLS ID: 259409 Office: 715.612.3756 mrenn@incrediblebank.com
Doug Belt is a Financial Advisor with WestPoint Financial Group based in Middleton, WI.
Local firms are sales offices of Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001, and are not subsidiaries of MassMutual or its affiliated companies. Douglass Belt is a registered representative of and offers securities & investment advisory services through MML Investors Services, LLC, Member SIPC. Supervisory office 525 Junction Rd, Suite 8100N, Madison, WI 53717. Phone: 608-829-0015