It’s unfortunate that an excellent track record of paying off your monthly mortgage payments might not be enough to make you eligible for refinancing. Refinancing could be a difficult process that involves property appraisal, accurate statements of your assets and income, your DTI or debt to income ratio, and credit history revaluation. In the event that you don’t meet one of these requirements, a refinance might not be possible.
Is Refinancing Possible with High Debt?
Because lenders have varying qualification requirements and offer different programs for home refinance, a mortgage officer in Salt Lake City says that you should not hesitate to look around if your current lender won’t give you a refinance. However, keep in mind that you should be realistic regarding your current financial circumstances after a refinance rejection. For instance, if your DTI is around 43%, be prepared to have a difficult time looking for a lender who’ll work with you, or if you have a DTI of around 63%, fix your finances first.
Is a Home Refinance Possible with an Underwater Mortgage?
If you’re concerned about lost home equity, you might have some options. Depending on the amount of equity lost, you could try repaying some of your principal balance first. If this isn’t an option, consider the HARP or Home Affordable Refinance Program, which doesn’t have restrictions on underwater mortgages. Take note, however, that HARP is a voluntary refinance program and will come with additional qualification requirements and restrictions.
Shopping Around for a Home Refinance
If a lender denies you a home refinance, remember that you could still try and look elsewhere. Take note that the law requires lenders to give you a clear and written explanation of why you were denied a refinance so you could either try applying with other lenders or resolve issues identified by your lender and then reapply when you’ve fixed your financial situation. Additionally, when applying for a refinance, make sure that you’re prepared, American Loans advised. You should obtain an accurate appraisal of your home’s values, debt to income ratio, credit history, and gather all relevant documentation before even speaking with a prospective lender.