Refinancing? Don't Make a Last-Minute Mistake
By Ric Edelman
Yogi Berra was right
With mortgage rates still at record lows, you may be tempted to refinance. If you do, be extra careful with your credit from the time you apply for your loan until the day you close on the transaction.
Thanks to quality control rules that Fannie Mae issued on June 1, mortgage lenders are now watching for any changes to your credit and are likely to re-check both your credit and your employment status the day before closing. So make sure you:
>> Don’t open any new lines of credit, including bank loans, mortgages, credit cards or any other financial arrangement involving a creditor.
>> Don’t increase your credit card balances.
>> Don’t let your credit score fall. Paying a bill late or opening a new account could cause your score to drop.
>> Don’t switch jobs. Verifying a new job could delay your closing, and if you locked in the interest rate on your new loan, that rate lock might expire due to the time delay. And if your income falls due to the new job, your loan-to-value ratio might adversely change, too.
Doing any of the above could derail your loan or cause its terms to be changed. Remember: Until the loan is closed, you don’t have a loan — or, as Yogi Berra said, “It ain’t over ’til it’s over.” Loan underwriting rules have changed since the last time you sought a loan or credit, so consult your planner for advice when refinancing.