Refinancing has been the buzzword of the mortgage sector for a while now. The opportunity to replace an old mortgage with a new one for lower interest is too good to pass up. Also, a refinance can help eliminate primate mortgage insurance.
However, getting your home loan in Salt Lake City, San Jose, or Denver successfully refinanced isn’t an entitlement. Although it’s the norm these days, it doesn’t mean you can qualify for it with little effort. An expert from American Loans notes that just because you obtained a mortgage in the past doesn’t necessarily suggest that you could repeat your past success.
Here are the potential roadblocks in your hopes of refinancing your unwanted, old home loan:
You Don’t Have Enough Home Equity
The first thing lenders look when assessing refi applications is home equity. The lack thereof can hurt your chances of qualifying because it makes the dealer a bit riskier for the other party. Your request may be granted in exchange for higher interest. If this is the best offer you can get with your home’s current equity, the benefits of mortgage refinancing would diminish.
You Have a Low Credit Score
Like in your first home loan, your credit history would be under great scrutiny. Bad credit can’t single-handedly cost your application’s denial, but you might not get the interest rate you have in mind. Your best-case scenario could be refinancing your old home loan for a new adjustable-rate mortgage.
You Lack Solid Income
Inadequate income can sink your refinance request. Having an unimpressive job history and insufficient assets would only compound your already bad situation. Even an excellent credit score might not suffice to make up for your weak proof of financial capability.
You Are Caught Selling Your Home
Generally, lenders aren’t keen on approving refinance applications of borrowers looking to get rid of properties. You might have to wait for about six months after taking your house off online listings.
Don’t walk into a lender’s office without strong credentials. Treat your refinance application as if you’re buying a house for the first time. If you do your part to convince the other party of your refi worthiness, you might get what you wish for with little stress.