Refinancing on the Fast Track

ASK ABOUT SHORTCUTS

Lenders have an incentive to speed up the process. After all, they don’t get paid if you don’t get your loan. So ask your current and prospective lenders if they have any programs to get you to the finish line quicker. Among the possibilities:

Loan Modification. These programs basically lower the rate on your exiting loan without changing the length of the loan. Loan modifications aren’t available to most borrowers, since their loans have already been sold on the secondary market and can’t be changed. But it never hurts to ask your current lender is such a program is available.
Streamlining. Some lenders offer a quick refinancing for current customers. You typically pay a slightly higher rate for the convenience and speed.
Reduced paperwork. Most so-called “low-doc” or “no-doc” loans charge you a higher interest rate in the exchange for requiring less documentation. Some lenders, however, have fast-track programs that eliminate some steps -- such as income and asset verification -- for customers with excellent credit. This speeds up the process without resulting in a higher interest rate.

USE THE INTERNET

Most people use the Internet to shop for rates but pick up the phone once they’re ready to apply. Starting your application on the Web, however, can help you bypass the traffic jams at the call center.

People who called Bank of America during March’s rush faced waits that exceeded 30 minutes. Those who applied online got the process started immediately – and were assigned a loan officer who could be reached by phone directly, circumventing the line.

USE A BROKER

If you have troubled credit, an unusual financial situation or are just overwhelmed by the process, it can pay to have an advocate who knows the system to help you sort through the options. That’s the role a good mortgage broker can play.

When mortgage applications soar, though, mortgage brokers can really earn their commissions.

Brokers do business with many different lenders and often have an inside track that can help speed up the process, said Don Petrasek, a former broker and real estate agent who authored a guide called “The Educated Home Buyer.”

“Mortgage brokers tend to be more entrepreneurial,” Petrasek said. “When there’s a large volume [of loan applications], the mortgage brokers are more inclined to figure out how to get them done.”

To find one, ask your friends and neighbors for a referral or visit the National Association of Mortgage Brokers.

HAVE YOUR PAPERWORK READY

Here’s what most lenders will ask for:

Pay stubs for the most current month
Your most recent 2 year W-2 forms
Bank and brokerage statements for the most current 3 month period
Homeowners insurance statement
Statements for any home equity loans or lines of credit
Last year’s tax return (or tax returns for the past two years if self-employed include all schedules or if you are employed at your current job for less than 2 years)

Smart borrowers will provide even more information, particularly if they’re self-employed, haven’t worked for the same employer for two years or have any kinks in their finances.

Instead of one year’s worth of tax returns provide 1040’s for two or three years, as well as pay stubs for two months and statements from your 401(k) and other retirement accounts.

“What that does is provide the underwriters with the information they might need so they don’t have to come back and ask for it” – leading to more delays.

FOLLOW UP AND FOLLOW THROUGH

Fax, overnight or hand-carry to the lender any paperwork that’s requested. Don’t wait for snail mail, and, by all means, don’t put off responding to requests for more information. Even short delays will send the wrong message.

If you don’t return those documents for a week that conveys to the lender you’re not as concerned about this loan as somebody who gets their documents back the next day.

Keep the heat on by calling or emailing your loan officer, broker or processor every few days until your loan is approved. Be polite and friendly, but make it clear you want the process to go as quickly as possible.