The Wall Street Journal - 20.03.2020

M4| Friday, March 20, 2020 THE WALL STREET JOURNAL.

the credit bureaus have received

the documents, they have three

business days to unfreeze the

credit. You can specify the window

during which you want a freeze

lifted, but it may be safer to per-

manently lift the freeze; you can

refreeze the file when the loan is

closed.

2

GET APPRAISAL READY

If you’re planning home im-

provements, either get them

done before your lender’s ap-

praiser comes to evaluate your

home’s value, or hold off on re-

pairs until after the visit.

“The house shouldn’t be under

construction at all,” said Donald

Boucher, president of Boucher &

Boucher, a residential appraisal

company in Washington, D.C.

While minor repair issues—the

Honey Do list, Mr. Boucher said—

won’t swing the appraised value,

larger projects might. If, for in-

stance, there is a bathroom reno-

vation under way, the appraiser

must either submit an “as is” ap-

praisal, which reduces the home

value by the amount of work left

to be done, or a “subject to com-

pletion” evaluation, which requires

the appraiser to return and con-

firm the work is done before the

loan closes.

Purge clutter and spiff the home

up as much as possible.

“You want people who drive

up—even an appraiser—to say, ‘oh,

this is a nice house,’ ” Mr. Boucher

said.

3

CALL YOUR ACCOUNTANT

“Self-employed people will

need a year-to-date profit-

and-loss statement prepared by

their certified public accountant,”

said Alan Rosenbaum, chief exec-

utive at GuardHill Financial, an

independent mortgage lender in

New York. “This is one of the

most time-consuming parts of the

process, because it is out of the

client’s own control,” he said. The

best strategy is to immediately

call your accountant and ask for

an estimate of how long it will

take; that can determine how

long a rate lock you need to seek

for the refi. While you’re at it,

ask for digital copies of your last

two years of business and per-

sonal tax returns—“We normally

just need federal returns,” Mr.

Rosenbaum said.

4

EXAMINE TRUST

DOCUMENTS

If the title of the home is

held in a trust, some lenders need

a copy of the whole trust while

others require specific pages, said

Michael Farrell, president of

Grandview Lending in Indianapo-

lis, a broker for the Indiana resi-

dential market. Make sure you

have the trust on hand; a digital

copy is even better so that you

can upload the required pages and

forward them to your broker or

lender.

Take a good look at those trust

pages and make sure there are no

typos—particularly name mis-

spellings. If there are, the pages

will need to be redrafted by the

trust attorney and notarized.

5

GO ON A CREDIT DIET

“Do not open a new auto

loan, credit card or any new

debt during the mortgage pro-

cess,” said Bill Banfield, executive

vice president of capital markets

for Quicken Loans, based in De-

troit. New debt causes numerous

problems. First, “it can affect your

ability to qualify,” said Mr. Ban-

field, if it pushes your debt-to-in-

come balance out of the lender’s

parameters. But even if it doesn’t,

it takes time for a lender to look

into the new source of debt, verify

it and run the debt-to-income cal-

culations again. Make sure you

take on new debt before starting

therefiprocess,orevenbetter,

after the new loan is closed.

As lenders process a tidal wave

of refinancings, they are facing

capacity problems, said Michael

Fratantoni, chief economist for

the Mortgage Bankers Associa-

tion. In normal times, they would

hire and train new staff members

and use outside firms to help.

These aren’t normal times, and

closing may take 60 to 90 days

rather than the industry standard

of 30 to 45. While this can be a

negative for a borrower eager to

start making lower monthly pay-

ments, there is a silver lining to

that, too. You’ll have more time to

resolve snafus.

CHRIS GASH

IN THESE TOUGH TIMES,arare

silver lining has come in the form

of mortgage refinancings—an ef-

fect of the stock-market selloff and

flight to safety, which has pulled

interest rates lower. Refi applica-

tions were up 79% the week ended

March 6 compared with the week

prior, according to the Mortgage

Bankers Association. Average

jumbo loan rates dropped to their

lowest levels since 2011, 3.58%,

while average conforming loans hit

3.47%, a level not seen since De-

cember 2012, the association said.

Where rates are headed is any-

one’s guess because “these are

unprecedented times and

markets are reacting in

ways nobody has ever

seen,” said Mat Ish-

bia, president of

United Wholesale

Mortgage in Pon-

tiac, Mich. Though

historically low 10-

year Treasury notes

should coincide with

plunging mortgage rates,

other factors, including inves-

tors pulling money out of mort-

gage-backed securities amid a

broad asset selloff, caused rates

to tick up last week; then again,

the Federal Reserve’s rate cut on

Sunday might send things lower.

Some lenders are so overwhelmed

with refi requests that they are

slowing the flow of business by

raising rates, Mr. Ishbia said.

The dynamic situation requires

that borrowers get ready to act

fast to lock in rates. While some

preparations—lowering debt lev-

els, improving credit scores and

saving up cash—require lots of

planning, unexpected snafus can

gum up the works at the last min-

ute. Here’s a list of the top five

avoidable problems to tackle be-

fore you refi.

1

UNFREEZE CREDIT

Once a huge generator of fees

for the credit bureaus, a fed-

eral law made freezes free—both

to activate and lift—for consumers

in 2018. If you took advantage of

this service to protect your credit

file from potential fraud, you

need to now lift the

freeze for the refi.

Lenders pull credit

files from the big

bureaus—Equifax,

Experian and

TransUnion—at the

beginning of the

process and some-

times again at the

end. Use the credit bu-

reaus’ online or automated

phone systems and request that

they unfreeze—which the bureaus

are required by law to do within

the hour. However, sometimes con-

sumers aren’t able to lift a freeze

so easily; instead, they must send

a request by fax or snail mail,

along with copies of a W2, driver’s

license or other identification to

the credit bureau, said Sathi Roy,

head of refinance at Better.com, an

online lender. In these cases, once

3.58%

Current jumbo loan

rates, the lowest

since 2011

Source: Mortgage

Bankers Assoc.

JUMBO JUNGLE|KATY MCLAUGHLIN

Prepping for

Your Refi

Rates are near historic lows. But before you

rush to refinance your home, make sure

you have these details nailed down.

MANSION

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