Interest rates are set to rise in 2014. This is going to make it harder for borrowers to qualify and to save money on their home loan. Time is of the essence if you want to refinance or buy in 2014. Acting quickly could save you thousands of dollars and help you to afford a nicer home.
Mortgage Tips for Refinancing or Purchasing in 2014
• HARP Home Loans are Still Available – If you don’t have any equity in your home, you can still refinance using the HARP mortgage program. This loan program has been extended and is available for helping families that have less than 20% equity or owe more than their home is worth. You can refinance and lower your interest rate to make it easier to afford your mortgage payments. While you cannot get cash out, it can make paying the rest of your bills easier.
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• FHA Streamline Refinances Close Quickly – If you have an existing FHA home loan, you could qualify for an FHA streamline refinance. They typically don’t require an appraisal which can help your mortgage refinance to close faster. Time is of the essence when you are worried about interest rates rising, making this a viable option. If you have a VA loan ask a VA approved lender about the Interest Rate Reduction Loan, the VA’s version of a streamline refinance.
• Prepare your Financial Documents – It will take longer to close your refinance or purchase loan if you don’t have your documents prepared. Gather up your two most recent pay stubs, two years W-2’s, and two years tax returns. While the lender may not ask for all of this information, it is better to have it on hand so you can get it to them quickly. If you have any rental properties make sure to gather those documents, as well.
• Gather your Asset Documentation – Print out your last two months bank statements (it has to be a full bank statement and not a screen print of your online banking). Also copy your 401k statements and any other asset accounts. This will be used to document cash reserves.
• Sign Paperwork Quickly – Your mortgage lender will need you to sign the initial application and disclosures before your loan can be processed. If there are any material changes, you will also need to sign updated documents. Make sure you do so quickly, as those documents are needed prior to locking in your interest rate.
• Lock Your Interest Rate – The only way to protect yourself against market volatility and rate fluctuations is to lock in your interest rate. Speak with your mortgage lender about your rate lock options and the likelihood that you will be able to close your home loan within that time frame. For example if your rate lock is for 20 days, but your loan doesn’t’t close for 30, you will have to extend the rate lock which will cost you money.
When refinancing or buying a home, it is important to work with an experienced mortgage banker that is an FHA approved lender to ensure you get access to the maximum number of loan options. If you are interested in refinancing or purchasing a home in 2014 call your mortgage lender today and discuss your options, before interest rates go up.
