After the big drop in mortgage rates last week, we are in another refinance boom. Rates are near their low point for the year, and though they are bouncing around from day to day, this is a great opportunity to get your rate down and save some money. December is usually the time when the real estate market slows down as home buyers are more interested in Holiday parties and Christmas shopping than schlepping through the snow looking at houses. It is also the time when most of the mortgage support staff (appraisers, processors, underwriters and loan closers) catch up on their down time and take their vacation days before they expire at the end of the year. So it is almost a rule that the mortgage industry runs shorthanded in December. What this means is that a lot of people in the mortgage industry are going to be pulling their hair out trying to get extra work done with fewer people to do it. But these are good problems to have, and I would much rather have extra business than too much time on my hands.

Refinancing makes sense for a lot of different situations. Any one who bought a home earlier this year and has a rate over 6.0% is going to have a chance to reset the loan and lower their payment. If you have an adjustable rate loan and you want to fix the rate, this is the time to do it when the rates low. If you have equity in your home and too much consumer debt, a debt consolidation loan can save you hundreds of dollars each month. If you have an FHA loan, you can take advantage of the FHA streamlined refinance program where you don’t have to qualify for the new loan, you just need to show your mortgage is up to date. Depending on your situation, you might be able to do this without even getting a new appraisal.

So there are a lot of good reasons why you might want to refinance, but the problem is taking advantage of the opportunity and getting your loan closed as quickly and smoothly as possible. The surge in loan volume makes the mortgage industry look like a pig that’s just been eaten by a snake. With so much volume there are going to be glitches, and the process will slow down as support staff gets overwhelmed. I normally close refinances within 30 days, and I am trying to get as much as possible through the system and closed in December. But mortgages have a 3 day right of rescission (3 business days when the consumer can change their mind about going through with the refinance), and we have the Holidays off, so the loan will have to be approved and ready to close before Christmas to close by the end of this month. To take some of the stress off I’m locking my loans for a little longer, just in case.

If you are looking to refinance your mortgage, here are some things you can do to move yourself to the front of the line and get your loan closed quicker and with less hassle:

Be prepared to act fast – We’ve had two other rate drops this year, and both times the best rates only lasted a short time. I think there is reason to believe that low rates will stick around longer this time, but the market has been incredibly volatile and when we do reach the lowest rates, the lender lock systems are often overwhelmed with volume. When the time is right you need to act fast.

Get your paper work in on time – I’ve spent the last week calling past clients and letting them know it’s a good time to refinance. Once your loan is locked in, the clock is ticking. We need to get all your paperwork through and your loan closed and funded before the clock stops. Getting your paperwork in is the first step. If you hold on to the loan documents for a while before getting them back to me, that means wasted time. The longer you hold onto the paperwork the harder it will be to close your loan on time.

Send in a complete loan package – To close your refinance we will need documentation on your income, assets and work history. Your loan officer will give you a complete list for your personal situation. If you send back everything that is needed, this makes everyone’s life smoother. Some of the items we may need include:

• 2 years W2s (Full tax returns if you are self employed).
• Current paystubs for the last 30 days.
• 2 Months of your current bank statements and other asset accounts – all pages attached.
• A copy of your mortgage statement.
• A copy of your most recent tax bill.
• Copies of your driver’s license or other photo ID.
• If you have a home equity loan or second mortgage, we will need a copy of the note to subordinate the loan.
• The name and phone number of your insurance company.

There may be other things needed depending on your situation. Getting everything needed up-front saves time and aggravation.

Make yourself available for the appraisal – For most refinances we will need a new property appraisal. The appraisers are going to be the first group to be overwhelmed. If you can be flexible and allow the appraiser in as soon as possible, this will help with your loan timing.

Refinancing your mortgage can be a great way to save money in a tough economy. The process will go smoother if you are prepared.

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