Top Reasons Why Refinancing Your Home Could Be a Challenge

Mortgage interest rates fluctuate frequently, but they have consistently been hovering close to record lows for many years. As a result, homeowners across the country have seized the opportunity to lock in a low rate through refinancing. Accessing home equity through a refinance has exceptional benefits, but some homeowners unfortunately realize that they are unable to get qualified for a refinance loan. There are several reasons why homeowners run into this situation, and these are among the top reasons.

1. Inadequate Equity
The loan-to-value limit for a refinance loan is significantly lower than the limit for a purchase loan. This means that you must have a substantial amount of equity established in the home in order to qualify for a refinance. A greater amount of equity is required for a cash-out refinance loan.

2. Low Credit Score
As is the case when you apply for a purchase loan, you will need a good credit score in order to qualify for a refinance mortgage. You can review your credit scores before you apply to determine if you need improve your scores.

3. Personal Finance Issues
Lenders maintain strict requirements for a borrower’s income and assets. If your financial situation has changed dramatically since you applied for a purchase loan or if lending guidelines have changed, you may not meet liquidity or debt-to-income requirements. In some cases, adjusting your requested loan amount downward could help you to qualify.

4. Employment Instability
Even if you have great credit scores and sufficient assets, your employment history may be an issue. Moving to a new company is not usually a problem. However, large gaps in employment or a change of careers may be roadblocks.

At MortgageDepot, we have successfully helped many clients achieve their refinancing goals. Even if you have been unable to obtain financing elsewhere, our loan originators may help you to obtain the loan that you need.

Contact one of our loan consultants to learn more.