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Five Factors Which Affect Refinancing Approvals

By Michele Lerner
Mortgage Credit Problems Columnist


When mortgage refinance rates hover around five percent, homeowners may want to apply for home refinancing. But even if you already own a home you may not always qualify if you have poor credit. If you are considering whether bad credit lenders may approve your loan, then look at these five factors which go into a lender's decision to approve you for a home refinance loan.

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Top 5 Factors Influencing Home Refinance Loans

The size of your loan impacts the home refinance process. Loans with a balance under $417,000 are easier to refinance since they are called conforming loans. Larger loan amounts may require a higher interest rate.

The type of residence can affect mortgage refinance rates. If you own a condominium, expect to pay higher interest rates of up to 1% because lenders consider a condo higher risk than a single family home. If you own a 2-4 family building or are trying a home refinance on investment property, you should also expect to pay a higher rate.

Credit scores impact mortgage refinance rates. Even a small improvement in your credit score can make it more likely that bad credit lenders may approve you for a home refinance. Regular lenders may charge higher interest rates for a mortgage loan if you have a credit score lower than about 740.

Both debt and income can affect home refinance. Lenders today typically ask for proof of your income and review all your assets and debts, even on a bad credit mortgage to make sure you are able to make the monthly payments. Even if you have a bad credit rating, try to pay off some of your debts and keep yourself on a strict budget when you apply for home refinancing.

Home equity can influence mortgage refinance rates. As home values have dropped in many areas of the country, approval may be harder to obtain for a home refinance. Some lenders are willing to refinance at a higher loan-to-value ratio. One way to find out if you and your property qualify for home refinancing is to complete the form on this page for review by lenders.

 

If you are considering refinancing your current mortgage--but are unsure where you stand financially--you can enter your information on this page and gain a better understanding on your chances of qualifying for a home refinance loan.

Sources

http://www.home-account.com

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