Columbus Home Buyers-With mortgage rates are hovering near all-time lows, lots of Americans are taking advantage of refinance and home buying opportunities. 

The downside of today’s unexpectedly-low rates, though, is that mortgage lenders are ill-equipped for the rush of new business.  Especially with all the refinancing going on. My lenders always tell me that sales always get put before refi’s but …

As a result, the process of underwriting and approving new mortgage applications is taking some conforming lenders as long as 2 months to complete(!)

This is double the time needed as recently as six months ago.

Because there may be 60 days between the application date and the closing date, it’s important for applicants to remember that mortgage approvals can be revoked at any time prior to funding. 

As mortgage applicants, there are many events that are out of our control — job security and health matters, for example.  But there are also events that are within our control. 

I always tell my clients that, once we’re in contract, don’t so much as buy a toaster on layaway. Knowing that mortgage approvals can be fragile, here are 8 things you should absolutely not do while your home loan is in process.  It may be the difference between being approved by the bank, and being turned down.

1. Don’t buy a new car or trade-up to a bigger lease.
2. Don’t quit your job to change industries
3. Don’t switch from a salaried job to a heavily-commissioned job
4. Don’t transfer large sums of money between bank accounts
5. Don’t forget to pay your bills — even the ones in dispute
6. Don’t open new credit cards — even if you’re getting 20% off
7. Don’t accept a cash gift without filing the proper “gift” paperwork
8. Don’t make random, undocumented deposits into your bank account

Now, avoiding these items may not be practical for everyone.  For example, if your car lease is expiring and you need a larger vehicle, it doesn’t mean you can’t buy the car — just check with your loan officer first to be sure the new payments won’t “break” your approval. 

The same goes for accepting cash gifts from parents.  There’s a right way and a wrong way to accept gifts and doing it the wrong way may prevent you from using the gift as a source of downpayment.

Mortgage lending is full of “gotchas” and with underwriting times stretching to 60 days, it’s a lot more likely that a mortgage applicant will trip into one.  Following these 8 rules, though, is a good start.

Every day you hear about mortgage rates going up, going down, compared to this, compared to that.  What does it all mean to YOU as you look for a home in Central Ohio?  Anything?

The best we could do is take a look at two distinct moments in time. If we are comparing July’s conforming mortgage rates to today’s average rates, there’s a 1.5 percent difference in favor of homeowners.  That means the annual percentage rate on the loan (everything else being the same such as 720+ credit score, no points, etc. etc.) is less currently than it was last summer (though more than a few weeks ago).

Rate drops like that certainly can make a big differences in a household budget.  Look at these before-and-after payments, based on rates from the chart:

$150,000 mortgage ($144 savings/month)

• July 2008: $958 monthly
• February 2009: $814 monthly

$250,000 mortgage ($240 savings/month)

• July 2008: $1,597 monthly
• February 2009: $1,357 monthly

$350,000 mortgage ($335 savings/month)

• July 2008: $2,235 monthly
• February 2009: $1,900 monthly

Of course, the flip side of this story is that while mortgage rates fell through late-2008, the mandatory lender fees that accompanied them rose.  That lessened some of the benefits of getting lower rates, but certainly not all of them.

According to recent housing data, buyers are back writing contracts and listed homes are selling quickly.  Considering how mortgage rates have led monthly payments lower, maybe it shouldn’t be much of a surprise.

(Image courtesy: The Wall Street Journal)