Blog entry: Qualifying for a Refinance...

We would like to take out a refinance loan due to rates lowering but we are concerned that we may not qualify with the recent credit cuts that have taking place this year.   The question i have is i was wondering if what people are saying is true or not.  Is it very difficult to take out a refinance loan right now?  We have tried our best to keep our credit history good.  We do have a few credit cards that we are working on but that will take a while longer to get them down further.   My wife and I have always tried to pay on time.  We have been in our jobs for over 2 year now.  Does this seem like we would be a good candidate for a refinance?  Any advice would be appreciated.

Sincerely,

Vince

West Chester, PA

Thanks for your email Vince.  You pose a good question.  It is a great time to refinance as rates are currently at historical lows.  I think a lot of folks share the same concern as you and your wife right now.  With the onslaught of media reporting how difficult it is to obtain credit these days, i believe that a lot of people share your concern. 

There are several factors to keep in mind.  First off - credit availability has tightened over the past 18 months for many Americans.  This has occured for several reasons. 

As far as qualifying for a mortgage loan refinance right now you should be prepared for 3 things.  You should be able to evidence income, assets, and a satisfactory credit history. 

What this means is that in almost all cases, you will be asked to support your income with current paystubs and W2 forms.  You will also need to show a decent credit record, especially when it comes to your mortgage payments being made on time.  Your credit does not need to be perfect - but it should be pretty good overall in order to get qualified for a new mortgage.  You will need to show some equity in your property through a new appraisal on your home.  Also of note is that in some cases, you will need to show proof of some assets.  

Since these factors are unique to each individual, they really determined on a case by case basis.  There are many things that you may not realize that could make this process much more easy than you might be led to believe.

Feel free to give me a call to discuss the particulars for more detailed advice.

T. Stafford