Should I Apply for a Mortgage Refinancing?

With interest rates lower than they have been in many years, many homeowners are

asking themselves “Should I apply for a Mortgage Refinancing?” It is tempting to

think that you can just go down to your local bank or make a few phone calls and

presto, you will have saved a lot of money, but the cold reality is different.

Because of the number of homeowners that are defaulting on bad loans and the

proliferation of bad loans that were written in the past five years, banks and

lending institutions have tightened credit. What this means to the general public is

that lending requirements are much more stringent now than at any other time in

history.

So the answer to the question “Should I apply for a Mortgage Refinancing?” may be

yes, if you are actually qualified. To be certain that you are qualified you need to

make certain of a few things first. Your FICO (Fair Isaac Company) credit score needs

to be above 700 and preferably above 720 with no late payments on any debt within the

last twelve months and any bankruptcies, foreclosures, or judgments on your credit

history. Your employment needs to be steady and the longer the better. If you just

started your job a few months ago, that can be alright as long as you have been

employed in the same general field for a number of years.

If you are self-employed and are asking yourself should I apply for a Mortgage

Refinancing, and then you need to be prepared to show good earnings through the past

two years of tax returns with all schedules attached, plus a current profit and loss

statement prepared by a CPA.

The most important factor to consider when asking yourself should I apply for a

Mortgage Refinancing is whether or not you have equity. Many homeowners these days

find that they are upside-down on their mortgage loan and actually owe more than the

property value will be appraised at. Banks will not want to loan on any property with

an LTV (loan to value) ratio of more than 80% generally. With property values still

declining around the country, banks will generally want to see a much lower LTV

before they take the risk of refinancing your mortgage.

So if you are still asking yourself should I apply for a Mortgage Refinancing, you

may want to consider the alternative of Loan Modification. Experts recommend that you

find a reputable, professional company that specializes in Loan Modifications in

order to get a lower interest rate that you can afford.