Five Refinance Obstacles to Watch Out ForOn the whole, it's much easier to refinance your mortgage than to get a brand new home purchase mortgage from scratch. That said, a refinance can still be tricky business if you run into any of the following five obstacles. You've lost equity in your home. This is one of the major refinance obstacles facing American homeowners today. If you have negative or insufficient equity, a refinance simply isn't practical or possible. Your lender will deny it on the grounds that the present value of your home won't secure a sufficient amount of the new loan balance. There isn't a very good solution to this, which is why it's such a serious issue. The best thing you can do is continue making payments on your current mortgage and hold onto your investment until it regains value, which history shows to be a relative certainty. You've recently refinanced. This will depend on your lender. If you've refinanced within the past six months to a year, you may not be allowed to refinance again. At the very least, it will hurt your chances of qualifying. Again, the solution in this case is to wait, though with the right negotiating skills, you may be able to talk your lender or a competing lender into giving you a new loan. You no longer live in the home. If you're trying to refinance a home that isn't your primary residence, lenders will require that you carry higher cash reserves in the bank and a greater amount of equity on the home itself. It's much more difficult to refinance an investment home than a residence. If you're planning to move out of a home and turn it into a rental property, refinance before you leave. Simple as that. If you moved out a while ago, you may not have as many new financing options open to you. Do as much research as possible and look for a lender that offer you a reasonable deal. You haven't performed well on your current mortgage. This is the best way to shoot yourself in the foot with regard to refinancing. If you've missed one or more payments on your current mortgage, it's likely you won't be able to refinance with any lender, period. Wait until you've developed a better performance record on your loan. Then try to refinance. Your credit score has dropped. This is the final nail in the coffin. If you don't have an adequate credit score or if your credit score has decreased rather than increased since you took out your initial mortgage, you may not be able to refinance. At the very least, you won't be able to take advantage of the lowest mortgage rates available in your area. Take the time to build good credit before you apply for a new mortgage. |
|
