• Facebook
  • Instagram
  • Twitter
  • LinkedIn
  • Mail
  • Schedule Call Now
Call Now (619) 934-7775
Mortgage Heroes | Be the Hero of Your Neighborhood
  • Home
  • Loans
  • Resources
  • About Us
  • Contact
  • Apply Now
  • Menu

Dos and Don’ts When Refinancing Your Home

Don’t Make Simple Mistakes That Can Cost You A LOT!

The idea of a mortgage refinance is rather uncomplicated at first glance; however, there are a multitude of things homeowners ought to avoid when they want to do a rate & term refinance or cashout refinance successfully with as few hiccups as possible. Below we have compiled the most obvious and helpful things to avoid while going through your refinance.

Do not change jobs. One of the qualifying factors for your refinance is income. It is vital that you maintain employment with NO gaps in employment while preparing for a refinance, or while your refinance is underway. If you are doing a rate & term refinance uninterrupted employment is a primary factor so that the bank can underwrite you full well knowing your ability to pay based on current employment. If you are doing a cashout refinance it is important to have uninterrupted employment and enough income to qualify for the increased loan amount being applied for.

Do not finance big ticket items like furniture, appliances, or new car. We know it can be quite tempting to get those shiny new things, and they are fun to have; however, doing so during the refinance process could stop you in your track when doing a rate & term refinance or cashout refinance. New credit items that carry balances in the thousands of dollars also come with new monthly payments that postponed for a short period of time until your refinance is completed. We want you to have that new entertainment set up to invite your friends over, we want you to have that new ride parked in the garage…but after your refinance is wrapped up so those cool things don’t threaten the financial objective you are working towards by refinancing in the first place.

Do not use credit cards in excess of normal use. Spending on your credit cards increases your balance owed and your minimum monthly payment. When you are applying to refinance your home you want to put yourself in the best position possible by minimizing both your balance and your monthly payment amounts. Additionally, using your credit card more than usual can give the impression that you are relying on that available credit to make ends meet, which could work against you in the initial underwriting process.

Do not spend money earmarked for “reserves”. Whether it is money in your checking or savings account, reserves that are verified on your bank statements are considered in your overall loan approval. Therefore, when it’s time to fund your loan it is necessary that your balances for all bank accounts included are the same or greater than when your loan application was submitted. While there can exceptions to this, the general rule of thumb is to avoid decreasing balances in the time frame from when your refinance starts to when it concludes. The action step here is to maintain your balances at, or above, your most recent bank statements final balance.

Do not withhold liabilities from the application process (child support, separation maintenance, alimony). These monthly obligations are typically required of you to make especially when court ordered, documented, and recorded. Leaving these out of your initial loan application on accident, or on purpose, will directly negatively impact your ability to qualify for a refinance. These weight of these monthly expenses can easily be lessened by doing a rate & term refinance or cashout refinance, as more cash in hand monthly can support these types of obligations. So, if you are currently paying any of these items listed or any obligation along the same lines as these examples, please communicate that to your loan officer so it will be considered in your refinance application.

Work with a Team of Home Loan Purchase & Refinance Experts

Schedule Your Call Today!

Do not make large deposits without first checking with your loan officer. Large deposits to your bank accounts during a refinance can raise a red flag with an underwriter. This is especially noticeable if the large deposit is infrequent, random, and un-paper trailed. Whether it is a gift, a bonus from work, or a windfall financial event, you will need to source the destination where the money came from, document the transfer of the funds, and verify the funds have cleared your account once received. Further, it is likely that an underwriter will ask for a letter of explanation to detail the transaction and why it occurred. To give yourself the best shot as closing your rate & term refinance or cashout refinance, hold off on those large deposits until after your loan is funded and closed.

Do not change banks before or during your refinance. Changing banks can seem harmless on the surface but can break the chain of transactional reporting that underwriters and banks rely on to see direct deposits, payroll, and match up monthly debt obligations with transaction history. The refinance process needs as few disruptions as possible leading up to and through the loan application, underwriting, and funding stages. If you must change banks, do your best to coordinate that change after the rate & term refinance or cashout refinance if completed.

Do not co-sign any loan for anyone. It is often out of generosity that we consider co-signing a loan for someone other than a spouse. It can come with some consequences such as your credit being affected if the primary borrower makes late payments or defaults on the debt obligation all together. Keep in mind that their credit items you co-sign for also shows up on your credit. So, when you are doing a rate & term refinance or cashout refinance, any and all items you have co-signed for become part of the underwriting decision. There are circumstances where proper documentation of on time payments by the primary borrower can be considered so that these monthly debt payments are removed from your refinance process; however, these circumstances heavily rely on proper documentation of all payments for the previous 12 months, or longer, depending on what type of debt it is. Consider your personal refinance situation over and above extending help to someone else in a co-signer capacity.

We know there are still other factors that may come under consideration when you choose to refinance your home. It is an important decision after all. We want to see homeowners get the most out of their homeownership by being properly prepared and educated to seamlessly get through a rate & term refinance or cashout refinance.

Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Vk
  • Share on Reddit
  • Share by Mail

CONTACT US DIRECTLY

If you would like to speak with our team about your home loan questions, please complete the form below. You can also start your loan application online by APPLYING NOW.

  • This field is for validation purposes and should be left unchanged.

Rates & Fees Disclosure:
‡ The payment on a $300,000 30-year fixed-rate VA loan at 3.000% with a 80% loan-to-value ratio is $1,292.01 with 0 (zero) origination points due at closing. The annual percentage rate (APR) is 3.235%. Payment does not include tax and insurance premium impounds. The actual payment amount will be greater. By refinancing your existing loan, the total finance charges may be higher over the life of the loan. Some state and county maximum loan amount restrictions may apply. Appraisal fee of $600, Processing Fee of $895, Underwriting Fee of $795 included in APR calculations with borrower paying 0 (zero) loan origination points.

‡ Based on Mortgage Heroes internal data.

RECENT POSTS

  • Monday Mortgage Minute – The Fed is up to batJanuary 30, 2023 - 5:37 pm
  • Monday Mortgage Minute – Uh oh the Empire State Manufacturing Index was super bad!January 23, 2023 - 7:48 pm
  • Monday Mortgage Minute – What the Fed Said, PPI, Existing Home Sales & Homebuilder IndexJanuary 17, 2023 - 1:51 am
  • Monday Mortgage Minute – Jobs data conflict and Jerome Powell speaks this week!January 10, 2023 - 6:18 am
  • Monday Mortgage Minute – WE HAVE A NEW SHOW FORMAT!January 2, 2023 - 9:55 pm

Follow us on Facebook

WE GOT YOUR SIX!

Mortgage Heroes has been helping Active Military and Veterans for more than 15+ years. This page is made to help all military families get the answers they are looking for when it comes to housing. Whether its questions about using your VA or new listings in SD, Mortgage Heroes are here to support just as each military member has supported this country!

GET IN TOUCH

Mortgage Heroes
873 Anchorage Place
Chula Vista, California 91914
group@yourmortgageheroes.com
(619) 934-7775
NMLS# 325149
See NMLS consumer access page

© Copyright - Mortgage Heroes | Locations | Privacy Policy | Disclosures & Licenses | Blog
  • Facebook
  • Instagram
  • Twitter
  • LinkedIn
  • Mail
Top 7 Reasons to Refinance My Home Loan va loan expert home loans refinance mortgage va loan expert home loans refinance mortgage Mortgage Heroes offers 3 Primary Loan Types
Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

AcceptDo Not AcceptSettings

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refuseing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Privacy Policy
Accept settingsHide notification only