Dec 292012
 
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In the post below we wrote about the pitfalls you could run into when looking to refinance your home mortgage, particularly those related to the value of your home and the appraisal process.  But what could go wrong, or at least affect your rate or terms on the refinance later in the process?  Here are the top three pitfalls in the later stages of the mortgage refinance process:

1. The underwriter may have trouble with some aspect of your refinance application.  It is common for the underwriter, who must fully approve your application after you have been initially approved, to come back with some requests such as an explanation of a large deposit in your bank account, or more information about something on your credit report.  In most cases you will be able to easily explain or justify these issues and the refinance process will continue.  However, occasionally the problems in this step are not satisfactorily explained and the refinance process can stop.

2. The broker who you are working with on the mortgage refinance stops doing refinances (if you are working with an individual who works privately), or the company you are working with goes out of business.  Of course this possibility is extremely unlikely, but you should be sure at the start of the refinance process that you have chosen a mortgage company or broker who has been doing this a while and has a solid reputation.

3. You home is damaged by an event that the mortgage broker or bank is aware of.  If there is a hurricane, earthquake, of flood in your area during the refinance process, the mortgage company may be asked by the bank to go out and double-check that there has not been damage to the property that you’re using as collateral for the mortgage.  This problem is complicated because sometimes if they get a promise from a homeowners insurance company that the issue will be fixed the mortgage refinance process can resume.

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