Between Loan Application and Approval

Mortgage rates are going down on record level. For that reason, millions are opting to refinance or purchase a new property. Even those that are having a hard time paying for their mortgage are able to seek assistance and save their property.

This is a reaction to the dwindling mortgage industry wherein foreclosed properties have devalued too many properties in one area. To entice clients into buying and refinancing again, they opted to lower the interest rate. Now that it has gained attention, everyone is in the hurry to be approved for refinancing.

But applying for refinancing and receiving approval are two different things. Applying is very easy but getting approved could take a long time. There are two reasons for this: first – there are too many applicants to deal with since everyone is rushing to get refinanced or approved for mortgage before the rates start to go up.

The second reason is that they are too critical today on how gets to be approved. Don’t think that you’ll be approved because you have a good credit rating. There are things that companies are looking out for to use it as an excuse to disapprove your loan.

More importantly, they will take a look at your financial activities from the time you applied for the loan. It will usually take 60 days or two months before you receive an approval. But you may never get the approval if you do the following within 60 days:

• Losing Your Job – Although this is uncontrollable, losing your job while in the process of getting approved for refinancing will result to denial. The logic is very simple – since you don’t have any source of income, you may not be able to pay for the monthly bill. This also goes the same with business owners who just closed their business during the application period.

• Personal or Family Injuries – This is relatively an unforeseen event, accidents and sickness that may have resulted to hospitalization could result to denial. The reason is almost the same. Falling into medical problems will result to increased financial problems. As much as possible, be careful on your physical activities as a single accident would ruin everything even though it’s not related to refinancing.

• Failing to Pay the Bills – The best way to show the lender that you are able to pay for the mortgage loan is to pay your bills. Missing one payment during the application period would provide a signal to the lender that you are not ready to pay the bills. For two months, pay the bills for now even though they are disputable.

• No New Credit Cards – Everyday, you see advertisements online and in your local store regarding a new credit card. Although they may look good because of the promotional interest rate, it can greatly affect your application. A credit card means another potential bill which means it could jeopardize your mortgage payment.

• Switching Jobs with different pay rate – If you transfer to another job with a better pay, it could be a plus point for you. However, if you transfer from regular payment to commission basis, you are placing your application in jeopardy. Commission based jobs do not have a stable income so there would be months that you won’t be able to pay for monthly bills.

Bottom line: Do not do anything drastic regarding your finances. Any increase in the monthly payment before being approved will be noticed which could cause denial for your application. Wait until you are approved before you make drastic financial movements. The two months of waiting for a good rating in refinance and mortgage is really worth it.