(Trends with Lender Requirements for Refinances)
Although there are streamlined loan programs available for certain refinances, the trend has been increasingly more requirements for refinances. Overall this is not a bad thing, but it does mean extra work for the parties to the refinance. Several of these requirements are completely new and need to be handled upfront to expedite a successful refinance.
One major change is that more lenders are requiring that the title insurance binder be part of the initial loan package (even before the appraisal is completed.) Prior to this change, the title insurance binder was usually provided with the final documents submitted to the loan underwriters. Accordingly the attorney or settlement agent now needs to be engaged earlier in the loan process. As a good practice tip, the Borrower should locate their prior title insurance policy and provide it to the lender and settlement attorney as part of their loan application.
Another trend is that more lenders are requiring well, septic and termite reports for refinances. One loan program that now requires this is the Veterans Administration (VA Loans.) There is nothing wrong with the lenders being more diligent, just be aware of the changes required for refinances.
PS #1 – These changes may extend to purchases as well as refinances.
PS #2 – Whatever the new lender requirements are, they should not prevent anyone from taking advantage of refinancing at these historic low notes!!