For some borrowers, refinancing is difficult. Underwriting and appraisal requirements have increased. For borrowers that do meet the increasingly stringent requirements, however, today’s record-low rates offer an unusually good opportunity, and, when taking advantage of the current conditions, there are a few tactics they can keep in mind.
Having a solid credit score is crucial when it comes to qualifying for refinancing, and this usually means 740 or above. Credit issues aren’t the sole premise of low-income borrowers either, as people with high credit scores who miss payments have more to lose, so to speak. It’s best to be aware of any problem areas and start repairing credit well before the qualification process begins. Loan officers remind their borrowers that they are legally entitled to three free credit report from Equifax, Experian and TransUnion, respectively, every 12 months, which is a good place to start.
In terms of other qualifying factors, things are generally easier for borrowers who have at least 20% equity and who have worked the same job for at least the last two years, unless they’re self-employed.
New borrowers and those refinancing know that lenders typically offer several different products. Even though the national average for interest rates is at an historic low, not all loans on offer are equal. Some of the larger institutions are also raising rates due to their pipelines nearing capacity; raising rates is meant to cut back on the volume of loans they have to process while giving profits a boost.
In addition to their products, different banks will have different loan costs. Origination fees for a $200,000 loan can range from under $200 to $2,000, and obtaining the numbers from a variety of lenders can serve as a useful bargaining chip. Ask your Loan Officer or contact us!
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