What To Do If Your Mortgage Refinance Application Is Rejected

Just because a lender has turned down your application for mortgage refinance, you don't have to lose heart. In fact, by fixing the problems and improving your finances, you should be able to get refinance from another lender.

When a lender rejects your mortgage refinance application, the first thing you need to do is to find out why it was rejected. Fix those problems and apply again.

The lender can refuse your refinance application for several reasons. Here are the top five reasons:

-The current value of your home is less than the amount you owe on your mortgage.

-Your credit score may be less than satisfactory.

-You cannot prove your income.

-You have listed your home for sale.

-The lender suspects that you are not earning enough to cover your expenses.

While some of these issues can be fixed quickly, others may take time.

You are underwater

If you are underwater (i.e. the value of your home is less than the money you owe the lender) you have basically three options:

Tell your lender that you will make a down payment. So, for example, if the current value of your home is 90,000 USD and you owe 100,000 USD on your mortgage, you will have to make a down payment of $10,000 to cover the difference. In addition to this, you have to bring the customary down payment. Most lenders insist that the buyer should contribute at least 5% of the value of the property.

Make sure that the appraisal is accurate. All information (square footage, number of bedrooms, bath) in the appraisal should be correct. If there are amenities like a deck or a patio, a large lot or energy efficiency features, you need to ensure that they are properly valued.

The HARP refinance program helps homeowners who are underwater on their mortgage. See if you are eligible for that.

Your credit score isn't satisfactory

Lenders have increased the minimum credit score required for getting a mortgage. Your credit score may not have changed in the last few years; however, it may not be high enough to refinance your current mortgage.

If your credit score is lower than 620, getting a refinance is difficult. In fact, some lenders only consider borrowers who have a credit score of 660.If you have a credit score of 740 or higher, you will get the best possible rates.

How to increase your credit score

Pay your bills before they are due. You should also pay off your credit card debts.

Consider getting an FHA loan. These loans require larger down payments and may also have higher interest rates. However, they take borrowers with a low credit score.

You can't document your income

Lenders will ask you to prove every source of your income. In order to ensure that every source is considered, you should mention all sources of your income on your tax return. You will need to submit your income history of at least two years to refinance.

You don't earn enough

Lenders compare your monthly income and monthly expenses to determine your debt-to-income ratio. You can increase your ratio by reducing your expenses or increasing your earnings. You can perhaps borrow money from your relatives to pay off your debts. Or you should consider getting an FHA loan. An FHA loan will consider the incomes of other family members who are ready to co-sign the mortgage.

You have listed your home

If your property is already on the market getting a refinance is nearly impossible. However, many lenders will consider your application if you are ready to take the property off the market. Some lenders will make you wait for 60 days, even after taking the home off the market. If you have already listed your home for sale, you will probably want to find a lender who doesn't wait for 60 days.

If none of these strategies work, you should wait until the refinance boom ends. When lenders aren't all that busy, they are more likely to entertain your application.

 

Common Refinancing Options Offered by FHA

Now that interest rates are pretty low, many homeowners are looking to refinance their existing mortgage. Lenders have also sensed this interest in refinancing and are trying to attract borrowers by offering special schemes. While some lenders offer mortgage refinance with no-appraisal, others promise mortgages with no closing costs. This leaves the borrower confused.

How can a borrower decide which refinance program is the right for them? Interestingly, there is no such thing as a right or wrong refinance program. It all depends on your unique financial situation and goals. When it comes to refinancing, you have got mainly two options: the FHA Positive Equity Refinance and the FHA Streamline Refinance.

FHA Positive Equity Refinance

This is another refinance program approved by the Federal Housing Administration. This is the refinance option mainly offered by national home loan companies like PennyMac. 

The FHA Positive Equity Refinance is reserved for homeowners who have non FHA-insured home loans. In order to qualify for this refinance program, buyers should be current on their monthly mortgage payments. Homeowners who have negative equity on their home are eligible to get refinance through this program

The FHA Positive Equity Refinance will give borrowers a 30-year fixed rate mortgage. In addition, the borrower will be eligible for a reduction of at least 10% in their mortgage balance. There will be no closing costs.

In order to qualify for this refinance program, you need to meet the criteria specified below:

•        Your home loan is not backed or owned by Freddie Mac, Fannie Mae, FHA, USDA or VA.

·         The amount you owe on your mortgage is higher than the value of your property.

·         You make your monthly payments on time.

·         You qualify for the mortgage under the standard underwriting requirements specified by FHA.

·         The home is your primary residence.

·         Your total debt amounts to less than 55 percent of your total monthly income.

Borrowers who have been convicted of theft, fraud, forgery, felony larceny, tax evasion or money laundering in association with a real estate transaction within the last ten years are not eligible for this program.

FHA Streamline Refinance

This FHA refinance program is reserved for borrowers who have a mortgage insured by FHA. When you choose this program, you will get to adjust the term of your mortgage and interest rate. Better still, this program has relatively simpler underwriting requirements. That means there will be no new credit checks, home appraisal, or documentation. Since there will be no new home appraisals, this option is ideal for borrowers who are underwater on their mortgage.

Applying for this mortgage refinance program is relatively easy. You will qualify if you have a mortgage insured by FHA. Your repayment history over the last 12 months should be clean. You will also be required to prove that you didn't refinance in the last 210 days.

There is yet another requirement. The applicant has to prove that they will benefit substantially by getting a refinance. In other words, they should be able to reduce their monthly mortgage payment by at least five percent.

Refinancing? Here’s What You Need to Know

Homeowners who have decided to refinance this year have made a wise decision because mortgage interest rates are currently still extremely low. Whether you have already decided to refinance or you are in the process of making sure that it is a good choice for you, there are certain things you need to be aware of in order to make the best decision.

Refinancing can be a great option for homeowners like you, but for some, it may not the best time to do so. Factors that can dictate this are your credit score, the costs, and many more. Here are some things that you need to consider when making the decision to refinance:

Break-even point

Will you get ahead or break even by refinancing? If yes, then you refinancing will be a great option for you. You can calculate your break-even point by dividing the costs of the refinance by the monthly savings of the new home loan. The answer you get is the number of months it will take to gain back the costs of refinancing. A two or three year period is the usual amount of time.

Costs

While refinancing can potentially save you money, it is a long process that requires you to pay multiple costs. You will be paying many fees associated with refinancing, from application fees to loan processing fees and more. You want to be completely prepared to spend some money upfront in order to get the process going.

Credit score

Since your credit score is a huge factor in the mortgage rates that you can qualify for, it makes sense to know your credit score before you begin refinancing. Your score should be above average or high, and it will affect the rates you are offered.

Staying in your home

When you refinance, you need to remain in your home at least until you break even. For this reason, if you are planning on moving before then, refinancing will not be a good option for you.

Refinancing a mortgage loan can be a long and costly process, but if you are prepared upfront, you can budget accordingly and get the best refinancing results!

Laminate Flooring: Pros and Cons

If you are a looking to replace flooring in your home and don’t know which material to use, consider laminate flooring. It is one of the most popular flooring types right now, and its pros could make laminate flooring a winning choice for your home. Its price, look, and easy installation are just some of the reasons why homeowners choose laminate flooring.

Just like any material, laminate flooring does not come without a few cons. Consider the following pros and cons of laminate flooring in your final decision:

Here are some pros of laminate flooring:

·         Price- Compared to hardwood floors, laminate flooring costs less. It can be installed on top of practically any existing floor. It is extremely friendly on your budget.

·         Durability- Laminate flooring is extremely tough, and it handles high-traffic beautifully. It’s perfect if you have pets and children in your home. Laminate flooring is also scratch-resistant.

·         Ease of installation- You don’t need any nails or glue to install laminate flooring. Some planks interlock with each other using dried glue that is already present on them.

·         Stain-resistance- Resistant to most stains, laminate flooring is easy to clean. You don’t have to wax them, and they are also water-resistant when spills are taken care of quickly.

·         Availability- Laminate flooring comes in tile and hardwood designs, and there is sure to be one that fits your home’s style.

Here are some cons of laminate flooring:

·         Moisture damage- Laminate flooring can be prone to moisture damage if it is exposed to standing water. Warping can occur if the flooring is exposed to continuous high moisture levels.

·         Difficult to repair- Because it can’t be sanded and refinished, laminate flooring involves removal and replacement of all damaged planks.

·         Noise- Laminate flooring can sound hollow when walked on, and it can also creak and clack.

Laminate flooring is a great choice because it looks great and gives your home a polished look. Best of all, it’s inexpensive and can add value to your home!

When You Should Replace Your Carpeting?

As a homeowner, you want to make the best investment decisions when it comes to improvements and upgrades. Not only should you be concerned with home value, you probably want your home to have an attractive style. Carpeting is a great addition to complement your home’s décor and look, but you probably already know that it doesn’t last forever. The life span of carpet depends on the use, but regardless, it will have to be replaced sooner or later.

So how do you know when it’s time to replace your carpeting? Consider the following signs:

Your carpet has rips and/or tears in it. This is a sign that your carpet should be replaced. While some carpeting can be repaired, this usually depends on the severity of the damage. Big tears are usually a sign that you need a total carpet replacement.

Your allergies are triggered. If you have older carpet in your home, there is a possibility that it is retaining allergens that are triggering your allergies

There are lingering odors. Pet odors and smoke can penetrate deep into the fibers of the carpet. There may be even some mildew growth if it the carpet hasn’t been properly cleaned for some time.

It’s worn bare. This may be another obvious reason to replace your carpet. If it no longer has that soft, plush feeling, it’s more than likely worn to the point of needing replacement.

The carpet is older than twenty years. According to experts, you should replace your carpet at least every 20 years in order to maintain good indoor air quality.

 

 

The Changing World of Refinancing

In the mid 2000's, getting a mortgage was a whole lot easier. Back then, borrowers were not required to have a good credit history. Even those who couldn't afford to make a down payment could get a home loan.

The underwriting norms were rather relaxed and more people could buy homes or get their existing mortgages refinanced. Some borrowers who saw good appreciation in the value of their homes drew out some of their positive equity and splurged that money on luxury cars or boats.

But then the recession arrived.

During the recession, several people lost their jobs and consequently many of them had to default on their mortgage payments. The value of properties, too, eroded. This forced banks to become more cautious and selective. Now getting refinance is not all that easy. Serial refinancing has become a thing of the past.

Recovering economy

The economy soon started showing signs of recovery and many people who lost their jobs during the recession are back to work. The value of homes, too, has increased. This has encouraged banks to relax their lending norms a bit. Now homeowners who are underwater on their mortgage payment are eligible to get refinance if the value of their home is slightly higher than their original loan amount. Even owners with negative equity are now eligible for refinance through HARP 2.0.

If you are planning to get a refinance, you should be prepared to deal with a lot of paperwork.

Refinancing now

Refinancing your existing mortgage is now difficult. It is still possible, but now banks have more stringent underwriting norms. Gone are the days when they would readily approve each and every application.

More paperwork

Refinancing now involves a lot of paperwork. Banks now require detailed documentation of your income because they are legally responsible to prove that you will be able to repay the loan. As a result, the borrower now has to submit additional documents like tax returns, pay stubs and bank statements.

Your credit score

Ten or 15 years ago, people who had little or no credit were eligible to get a home loan.  But now you need a good credit score. If your credit score isn't satisfactory, you should improve it before trying to get refinance. You should also get a credit report. There may be errors or inaccurate information in it. Your credit score will improve when you get those errors rectified.

Borrowers should also have a good idea about the value of their home.

Longer waiting periods

Now that rates are at their historic low, lenders are getting flooded with numerous home loan applications. Consequently, getting an approval now takes much longer. You can, however, speed up this process by responding quickly to document requests. Any delays on your part can cause your rate lock to expire. You will probably have to pay extension fee as well.

If you are paying too much interest on your fixed-rate mortgage, you are a good candidate for refinancing. When you refinance, you get to enjoy the lower rates. While choosing a refinancing deal, don’t forget to compare rates and fees. To get the best possible deals, you need to stay abreast of the latest happenings in the world refinancing.

Five Tips to Get the Best Refinancing Deals

Fears of recession and widening debt crisis in Europe have lowered mortgage rates in the US. In fact, the current 4% rate on the standard 30-year fixed rate mortgage is the lowest in almost 60 years. Needless to say, many homeowners are planning to refinance.

U.S. banks now follow tight lending standards. Gone are the days when anybody could qualify for a mortgage. That said, if you do a little search, finding a lender is still possible provided that you have a credit score of 740 or higher and at least 20 percent equity in your house. Here are 5 tips to get the best refinancing deals:

1. Shop around.

Mortgage interest rates can vary widely, so do some research before selecting a lender. Rates shouldn't be the only criterion. Processing fees, too, can vary between lenders. Contact lenders in your locality and also ask relatives or friends to recommend a lender to you.

2. Think about closing costs.

Today's mortgage rates are pretty low. But if you already have a low rate, you should perhaps skip a refinance because a new loan may carry closing costs amounting to thousands of dollars. So, if you already have a 4.5% mortgage, you probably have no reason to refinance and get a 4% mortgage.

Before getting a refinance, you should think about closing costs. Ideally, you should refinance only when you can get interest rate cut by 0.5% or more. You should also calculate how many months you will take to recover your closing costs.

3. Beware of hidden costs.

All mortgage refinancing options have closing costs even if they claim that there aren't any. You might come across ads that say 'no closing costs'. You will still end up paying costs in one way or another. Closing costs are typically 1% of your principal amount. Lenders can work these costs into your refinancing deals in several ways.

Some lenders, for example, require borrowers to make an upfront payment. You will have to bring a signed check to cover the expenses. The lending institution will tell you how much money you need to pay. By contrast, 'rolled in' closing costs are added to your loan amount. You won't have to make an upfront payment, but you will have to pay slightly higher EMIs throughout the tenure of your loan.

"No cost" refinancing deals do not usually charge any closing fees; however, they have higher interest rates. It is impossible to say if one option is better than another. So the key is choosing a method that will work best for you.

4. Think about 'cash-in' refinancing.

During the property boom, many homeowners refinanced their existing mortgages to get larger loans. Since housing prices were soaring, they had enough equity in their properties. The housing boom, unfortunately, was followed by the housing bust. Now many homeowners are interested in 'cash-in' refinancing. They are swapping their existing mortgages for smaller ones bringing money to the table to make up the difference. These deals are helpful to customers whose home values have plummeted. By getting a smaller loan, they can increase their home's equity. This also allows them to qualify for refinancing.

5. Get a "rate-lock" confirmation.

Now that mortgage rates are ridiculously low, lenders are getting flooded with refinance applications. To protect your interests, you should get a lock-rate confirmation in writing. A "rate lock" sheet confirms the rate you are getting. It also mentions when the rate expires.