Are you eligible for Mortgage Refinancing?

posted on 16 Mar 2016 03:54 by theretirementwiz

Watching all the commercials on television, and seeing how many mortgage websites crop up everyday, you would think that there was an endless supply of lenders just waiting to give everyone mortgages. It would also appear that there are no restrictions on who receives a mortgage and indeed, it seems like it is a rather simple process. But the truth is, even when mortgages were written haphazardly during the recent mortgage debacle in the US, there were still criteria for choosing who received a mortgage. And now even more than ever, one must ask, "are you eligible for mortgage refinancing?".

In order to determine your eligibility, below you will find a TEN POINT checklist that should start you in the right direction.

  1. Property taxes are paid.
  2. Insurance is paid and the amount insured meets the basic amount required in time of disaster or liability.
  3. Income taxes are filed and paid.
  4. Current mortgage is in relatively good standing. Most lenders accept that sometimes honest mistakes are made so even if you do have one or two NSFs or late payments, it still may be possible to refinance, assuming you are looking at a new lender. Where an issue arises is in the case of consistent, and consecutive arrears. Likewise, if you have resolved a financial issue and have moved forward, it will bode well for you when applying for mortgage refinancing.
  5. If you are requesting a mortgage refinance so that you have available cash for something else (also called a cash-out refinance), some lenders will require a reason for the extra funds. And in some cases, such as refinancing to pay out other debt, they may actually make the payments to the creditors to protect their investment. In a case where some people may use debt consolidation as a reason for refinancing, if they spend the money elsewhere, their ability to repay the mortgage may be jeopardized.
  6. A credit history that indicates you have a record of paying debt on time, and one that shows no issues with debt fraud is important. Further, some lenders will not do business with individuals who have had bankruptcies. But again, each lender has different requirements.
  7. The home is of the same value or higher. The lender will require an appraisal and your home should be kept in good repair. Houses that have depreciated, or are not up to code are going to be a problem when determining whether you are eligible for mortgage refinancing.
  8. If it's a reverse mortgage that you need to refinance, make sure you get specialized information, such as what's available here:
  9. The area or demographic of a home may impact your mortgage eligibility. For example, houses in rural areas may be harder to refinance than houses in the city. And, certain types of homes may be more difficult to mortgage. Forced to choose between customers, a lender will ultimately choose a brick home in a major metropolitan area than an aluminum sided home in an obscure or smaller center.
  10. The number of mortgages on the home will also impact whether you are eligible for mortgage refinancing.
  11. Your equity in the home is your advantage. Generally, the more equity you have, the easiest it is to obtain a mortgage refinance.