How Do I Know If I Am Eligible To Refinance My Mortgage?

There are many homeowners whose budget could benefit by refinancing into a lower fixed interest rate or for a lower amount of money on the loan, but many homeowners are unsure if they can qualify for a refinanced loan.

Information On The Home

How big is the home?

Most refinances are based upon the value of the home and if the value goes over what is owed, the funds will not be given to the homeowner.

Who owns the loan?

If Fannie Mae or Freddie Mac owns the loans, the chances of getting it refinanced are high because of the current trouble that those companies have had. Many of the loans that were written through these companies have been refinanced through other companies that can be guaranteed without government assistance.

Information On The Loan

How current is the loan payment?

If it is current and has been current for the past 12 months, the odds of refinancing are in the homeowner’s favor. If the home has not been owned for a year, the homeowner’s payments need to be on time and in full.

How much is the home worth?

If the home loan is “upside down” or the loan is more than what the home’s estimated worth is, the chances of getting approved for a refinanced loan is slim. Making home improvements will increase the home’s worth, but it may not be enough to compensate for the difference between the estimated worth and the loan balance. If the loan balance is lower than the value of the home, refinancing will be easier because a sell of the home can cover the losses of the loan, if needed.

Information on Income

How much income is available to pay for the new mortgage loan?

If the debt to income ratio is more than 35%, a refinance will not usually happen. If the refinanced mortgage will replace much of that debt ratio, the bank may approve it with some conditional terms.

Related posts:

1. Is Mortgage Refinancing Right For You?
2. Are All Mortgage Loans Able To Be Refinanced?
3. Can I Get A Bad Credit Refinance If I Am Unemployed?
4. How Does Bad Credit Affect A Mortgage Refinance?
5. How Do I Refinance My Second Mortgage?