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Am I Able to Refinance Now?

Mortgages

With interest rates near historic lows, and the President urging us all to refinance, many of us have begun to wonder if refinancing our Jacksonville home is the right thing to do.

With all of this excitement over low interest rates, it is important to first understand that refinancing may not be so straightforward after all. With banks imposing much stricter lending criteria, many of us who want to refinance may not get the chance to do so.

Here are some of the criteria banks look for when considering whether an individual can refinance:

• Credit Score – Don’t expect to refinance in today’s current, economic situation unless you have a credit score greater than 720. Before refinancing, it is a good idea to order copies of your credit report from all credit reporting agencies to see where you land. And, as always, carefully examine your credit report for errors, as this could seriously affect your overall FICO score.


• Home Equity - You must have at least 20 percent equity in your home. To figure this out, simply subtract your home loan balance from your home’s current appraised value. It is possible to obtain financing if you have less than 20 percent equity in your home; however, it may end up costing you more in the long run because you will likely need to factor in the added cost of private mortgage insurance.


• Stable Employment Situation – To be considered for refinancing in today’s tough credit market, your lender will likely examine your employment status. This may include the amount of time in your current position, as well as the business you are in. For example, some lenders may not approve loans for individuals employed in “risky” industries. Each bank will have its own set of classifications regarding these risky industries, so it is important to ask plenty of questions before refinancing.

Date: 2009-04-15 09:20:00
Views: 642

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