When the housing bubble burst, so did the banking industry. And banks and lending institutions are still leery about lending any more money. They don’t want to increase their risk levels again; they can’t afford to. So, anyone who wants to try to refinance their home now is going to have to work much harder to get approved. Stay on top of things with these mortgage refinance tips.
If refinancing is on your list of things to do, make certain you know the market value of your home. When the finance and housing market bubbles burst, home values dropped dramatically. For anyone who purchased their home within the past five years or so, this has had dire consequences. Homeowners are shocked to find there is no equity to borrow against. However, you can put equity back into your home by increasing its value.
Redoing a brand new kitchen is not going to help the problem. Adding new sod, painting the house, and adding crown molding, however, could bring your house back to where it should be in market value while you still realize a profitable return on investment for the cost of improvements.
If you are one of the many who is waiting for a 5 year ARM to come due, don’t do anything hasty. You may not need to do a thing.
Now, five years later, those same rates – and lower – are the norm. You have an excellent chance of having your mortgage reset to a rate that is very comparable to what you are already paying, if not lower. Before spending money on a refinance – which will include closing costs, tax stamps, an appraisal, and a broker’s fee to say the least, let the loan reset. You might be pleasantly surprised – you’ll save a bundle.
Of course, all loans depend greatly on your credit report and FICO score. If anything has happened to adversely affect your credit score, you could be compounding the problem. If your original APR was much higher than those of today, your ultimate loan offer from a lender may very well result in a higher APR after your new credit score is take into account.
Try to figure out which lender you’d like to work with. Each inquiry on your report actually counts again you. It doesn’t matter if the loan is approved or not. To compound the problem, if the loan isn’t approved, and you do need to apply with another lender, future lenders will see this inquiry and assume you were turned down and treat you poorly even before seeing your paperwork.
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Tags: Mortgage, mortgage refi, mortgage refinance