Buying 12 Months After Refinancing

Mortgage Approval Within 12 Months Of Closing A Primary Mortgage

Have you heard?  It is a little tougher to get a mortgage nowadays!  Ok, so to anyone with a pulse and access to electricity that is the ultimate example of an obvious statement.  All industry changes considered, the mortgage market is NOT as scary as one may think.  Qualified borrowers have complete access to mortgage products such as FHA, VA, Conventional, USDA and JUMBO home loans.  However, there are a few extra hoops to jump through if you are going to finance a home today.

6 Month Mortgage Rule

There is a sneaky little guideline that has popped up relatively recently that can catch an unsuspecting loan applicant completely off guard if not notified up front during a mortgage pre-approval.  This subtle rule states that if a borrower has closed EITHER a refinance or a purchase mortgage on a primary residence they may not be able to finance a new primary residence until 6 months has passed.

Why Have Lenders Adopted Guidelines Such as This?

The mortgage world has become a bit sensitive to fraud and this guideline is a direct result.  Recently, some homeowners have refinanced the home that they either do not live in OR they know they will not live in as a primary residence in the near future.  This is a MAJOR no no in mortgageland.  The occupancy that a loan is closed under (residency types = primary residence, vacation home or rental property) is critical.  When any lender originates a loan, they do so under one of these occupancy types.  Each occupancy type carries a different set of guidelines, a different interest rate and most importantly a different level of risk to the ultimate investor that purchases the loan from the originating lender.  Rental property mortgages carry the largest risk of default while mortgages on owner occupied properties carry the least.

When a lender originates/closes a mortgage loan, they essentially guarantee the end investor that buys the mortgage from them that the occupancy the loan was closed under is accurate.  After buying the loan, if the end investor finds out that the originating lender did not perform due diligence in determining whether or not the home was an owner occupied or a rental property that same end investor can force the originating lender to buy the loan back.  If the loan in question equals $200,000 than this little detail can cost the originating lender, well – $200,000!  No lender in business today can afford to make these mistakes.

I tell you all of this to help you understand where these seemingly crazy mortgage rules come from.  They come from the top down.  Lenders do not sit around dreaming up ways to make a client’s mortgage experience as difficult as possible.  Quite the contrary.  We are required to adapt our guidelines and “dance” according to what strings the powers that be (Fannie Mae/FHA/VA) decide to tug on.

In short, the road to an Arizona home loan approval has been redesigned to include more speed bumps, sharp corners and potential blind spots.  As an AZ loan officer, I welcome these changes.  After all, it is job security. Long gone are the days when just anyone can originate and close a home loan.  Mortgage product and mortgage process knowledge is critical.   This guideline is just one small example of why teaming up with THE correct mortgage partner is absolutely essential to your home loan success.

Please call or email me today if I can assist you with your home loan approval.

By Jeremy House
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  1. I would like info on lenders who do home loans after the year waiting period. I own a home and would like to consilidate miy bills credit cards.

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