Reflecting Upon The Legal Process Of A Michigan Refinance


To minimize the time it takes for the lender and associated bodies to process an application, it is important that the legal process of a Michigan refinance is properly researched. It will take far longer to see an application through to its final stages if the person applying for the refinance hasn’t undertaken due diligence prior to submission.

Even though most people understand that their credit rating plays a significant role in determining whether or not they are suitable for a loan, many people don’t know which of the three major credit bureaus are most commonly used. Residential mortgage lenders most often take credit ratings from Experian, Equifax, and Trans Union, and as a general rule, the higher scores are most favorable. Furthermore, the successful candidate will have a substantial credit history that illustrates stability.

If there are any delinquent accounts, liens, or foreclosures, this will have an adverse effect on the outcome of the application, however all is not lost. Mortgage lenders will still approve applicants with a poor credit history, though the older these discrepancies are, the better.

The initial down payment and the final remaining equity of the intended property purchase after refinancing has an impact on the lender’s consideration. There will always be a minimum down payment as stipulated by the lender’s guidelines, and as a general rule both the down payment and remaining equity should be as large as possible. Liquid assets are always most encouraging, and there will also be a minimum amount of time that the down payment funds will have had to be in an account.

The loan period and function are two of the most important things to think about when assessing risk from a lender’s perspective. The loan term should be as short as possible, providing the expense ratio remains realistic, affordable, and livable. Taking out a loan with ‘cash out’ or cash back at closing presents more risk to the lender as liquid assets can change hands more quickly. Lenders are more likely to approve applications that are only for the balance of the property.

Property types such as condominiums often have added risk involved, as there is always the possibility that the builder or homeowners’ association could go bankrupt and fail to uphold necessary maintenance on the property. It is for this reason that lenders’ guidelines are more stringent with condominiums or similar property types. Therefore, the property that carries the least amount of risk to the lender is that of a standard single family home.

Similar to having a substantial credit history, the applicant should have a strong history of income, and this is especially true of those who are self employed. The longer the history, the better, and evidence of income vs. Expenses and correctly filed tax declarations may have to be submitted to the lender.

To summarize, there are many facets to the refinance application process to be considered by both the candidate and the lender. After having learned the facts, the candidate should always ensure that the first submission is done properly, as obviously any setbacks will be a loss of time and money.

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