Home refinances are easy, quick and every homeowner’s answer to their financial woes, or so say the re-fi commercials and advertisements. Not so fast my friends, here as Paul Harvey used to say is “the rest of the story.” Austin home re-fi’s are not easy, quick or necessarily a sure thing. There are potential pitfalls. Knowing the
Know the Obstacles That Could Derail Your Refinance
Knowing some of the potholes along the road to a new loan will help you prepare for unexpected surprises and have a “Plan B.” Several underwriting issues could scuttle your loan request and stamp your application “rejected.”
#1: More Stringent Credit Requirements
Even though you have a good payment record on your existing loan, lenders are now demanding near pristine credit scores. To get approved for the lowest interest rates, you need a FICO score above 740. While 740 is less than the “perfect” score of 850, it is nevertheless challenging to achieve.
#2: Low Appraisal
Since 2008, the average value of a home has dropped by 1/3 or more in many places. Be prepared for an appraised value of something less than you think it should be. If your requested loan amount is near the total value of your home, you may be required to obtain mortgage insurance which drives up your monthly payment.
Use Our Austin Home Value Estimator to find out what your home is worth in today’s market.
#3: Existing Home Equity Line of Credit
Maybe you forgot about the home equity credit line you took out some time ago. Even if you have not taken one dollar of the available funds, your line of credit could derail your refinance. If you are trying to refinance your first mortgage, the home equity lender must agree to the new loan. The home equity lender must sign-off and agree that the primary loan will always be paid off first. There may be additional fees charged, all of which may make your re-fi more difficult to accomplish.
#4: Condominium HOA Problems
Poorly managed or financially troubled HOAs are a major source of concern for lenders. When property is subject to the decisions of an unpredictable broad of directors, the risk of default increases and lenders are risk adverse. Deferred maintenance, low owner-occupancy percentage, excessive HOA fee delinquencies will usually be predictive of rejection.
#5: Lack of Responsiveness
Lenders want the most up-to-date and accurate financial information about the borrower. Unfortunately, lenders tend to ask for information piecemeal – one document at a time – which drives most home owners toward a state of madness. Expect re-fi processing times to approach 90-days. If you relax, expect the unexpected, respond in a timely manner to even the most unreasonable request for documents, you’ll have a better chance to get you’re re-fi approved and at the same time keep your sanity.
Thinking of Refinancing Your Mortgage Loan?
If you’re thinking of refinancing your mortgage to take advantage of today’s historically low rates, you’ll need a mortgage lender who knows the pitfalls so they can prepare your file to have the best chance of approval from the underwriter. We know a couple of great lenders who can help get this done for you. Call us at (512) 827-8323 or email us at info@11OaksRealty.com and we’ll send you over those names.
How Much is My Austin Home Worth?
Our Market Snapshot tool can help you estimate what your Austin home might be worth. Unlike most other online home value estimators that base their estimates on unreliable public records, our Market Snapshot tool bases the analysis on the same data Realtors use, making the value much more accurate. If you’re curious to find out how much your Austin home is worth, all we need is your address and your email. Simply fill out the form below and we’ll get the Market Snapshot for your home sent to you right away. Need a more detailed analysis? Try our Qualified Home Evaluation.
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