With interest rates at all-time lows many homeowners have jumped at the chance to refinance their existing mortgages. As rates have continued to drop, many homeowners have refinanced their mortgage more than once. But there are some homeowners who have resisted the urge to refinance for one reason or another. We have put together a list of the most common reasons why homeowners have resisted the refinancing craze.
- Credit – Many lenders require that borrowers have a minimum credit score in order to refinance. If you have put off refinancing your loan because you believe that your credit score is too low to get approved, you are not alone. If your credit score can affect your attempt of refinancing you may want to consider clearing up any outstanding credit issues that may be affecting your score negatively. You can also consider refinancing through the Federal Housing Administration which requires borrowers to have a minimum score of only 580.
- Equity – When the housing crisis struck it affected the amount of equity that many homeowners had accumulated in their homes. Many homeowners have still not regained the amount of equity that they had prior to the crisis hitting. If this is what has been holding you back from refinancing, you may be interested in the new program created by the government known as the Home Affordable Refinance Program. This program was created to help homeowners who have found themselves underwater on their existing loans refinance.
- Debt – Recent financial turmoil has forced many homeowners to become more dependent on their credit cards in order to make ends meet. This dependency may have left you with a higher debt-to-income ratio than you previously had. While this additional debt may affect your dreams of refinancing your mortgage there are some things you can do. The first thing you can do is to take proactive steps reduce the amount of outstanding debt that you currently have. This will help make you more appealing to lenders who will base their decision on your debt-to-income ratio.
- Appraisal – You may have put off refinancing because you received a low appraisal on your home. A low appraisal can be just as detrimental to your refinancing hopes as a high debt-to-income ratio. As a homeowner you have the right to challenge the appraisal that was given to your home. You can also choose to have a second appraisal done in order to achieve a higher appraised value of your home. If your home appraises higher after the second time, you will then be able to pursue your refinancing goals. Don’t allow a low appraisal to get in your way, exercise your rights as a homeowner to either challenge the value or have a second appraisal performed.