Missed and Skipped Payments On Your Refinance Loan

Your FICO scores and credit history are a very important part of refinance loan approval. Even if you are applying for a no-cash out refinance loan such as a streamline refinancing or Interest Rate Reduction Refinancing Loan, your lender may choose to require a credit check and/or appraisal.

That’s why it’s very important to maintain a record of on-time payments on all financial obligations for 12 months leading up to your loan application, AND continue to be vigilant about making those on-time payments all the way through your home loan approval and closing phases.

Many borrowers don’t realize that the lender is required to insure there are no significant changes to the borrower’s financial status before the loan closes. For example, a set of overdrafts on your checking account could be considered a red flag on a home loan or refinance loan application; such activity may indicate a change in financial status for the borrower that could seriously affect the loan application even if it has been pre-approved., Until your loan has closed, you should not assume that you can have late payments, open new lines of credit, etc.

Missing payments can hurt your loan even if it’s on the way to being approved or closing, depending on circumstances and the lender.

In the case of some refinance loans designed to help a borrower catch up on payments and clear the books, so to speak, it’s crucial for borrowers to know that many lenders and government backed loan programs do not permit the borrower to “skip payments” on a mortgage loan as the new loan begins--you would be required in such cases to pay and make the loan current, or depending on the terms of your refinance loan, have missed payments included into the new loan amount.

It is very important to stay on track with all payments and credit activity all the way up to loan closing time. Don’t assume your lender will miss, overlook, or forgive activity that appears to indicate a change in your ability to afford the new loan.

Rate this item
(2 votes)

Top Reads This Month

  • FHA Refinance Loans and Interest Rates

    FHA mortgage loan rates and refinance loan rates stayed well below the 4 percent zone in the last days of the year--now that the new year is here, borrowers may not be sure how long the best-execution FHA mortgage loan interest rates reported at the end of the year may last. Do you know whether your’re ready to commit to…