Reasons You Could Be Turned Down for a Refinance on Your Plano Home

Although mortgage rates are still historically low, they are rising and rising quickly.  In less than 2 months, interest rates have risen a full percent in some cases.  Rising mortgage rates, along with rising home prices, make for a market slowly leaning in favor of home sellers.  However, rates are still low and prices are still reasonable, making this a great market for people not only looking to buy a Plano, Texas home, but also people looking to refinance.  This can be particularly vexing for someone who wants to hop on the refinance bandwagon, but just can’t get approved.  Here are some reasons why you could be turned down while trying to refinance your home.

• The first reason that a lender could turn you down is because of a less-than-favorable credit score.  If you’re still recovering from the recession and your credit reflects it, it may be a good idea to wait on the refinancing of your Plano, Texas home.  If you’re looking for a traditional conventional mortgage, a credit score of around 740 is necessary to have access to the best rate, according to AOL Real Estate.  However, depending on other factors, conventional loans are still available with credit scores down into the low 600s.  Government-backed program such as FHA, VA or USDA are known to have more flexibility when it comes to credit scores, as most lenders are looking for a credit score somewhere in the ballpark of 620-680 to consider you for a refinance or purchase.

• If you are underwater on your mortgage, it’s very likely that you could be turned down for a refinance.  From a lender’s perspective, if you’re upside-down on a mortgage, your loan is considered to be more risky due to the lack of equity in the home.  That can translate into your loan not getting approved or may require some cash to be paid at closing.  However, if your underwater mortgage is owned by Fannie Mae or Freddie Mac, you may qualify to take advantage of the Home Affordable Refinance Program (HARP), which assists homeowners struggling with their mortgages backed by the aforementioned lenders.  Click here if you are interested in learning more about HARP 2.0.

If you are interested in a complimentary mortgage review to better understand your options, feel free to give us a call, 972-499-0454!  We would love to help you find the best fit for your needs.