November 24th, 2018 7:38 AM by Jackie A. Graves
If you’re looking to take advantage of low interest rates
and refinance your home loan, don’t let these 5 common mistakes sink your
Mortgage interest rates may
be at all-time lows, but it’s tougher than ever to actually get your mortgage
refinanced. Boost your chances of success by avoiding the five biggest
mistakes home owners make when refinancing.
1. Not getting a
quote from your current lender
Unless you hate the lender you’re with now, start your refinance shopping
there. Since the company already has a (we hope) good relationship with you,
they’ll probably be anxious to retain your mortgage
business. If you bypass your current lender, you may miss out on the fastest,
easiest trip through underwriting.
However, if you’ve gotten horrible service, you can ask for a rate quote anyway
and use it to comparison shop other lenders’ deals.
2. Having too many bills
and too little money
Lenders look at how much income you make and how much money goes toward your
bills each month. If you’ve got a lot of debt and high monthly payments, your
lender might decide you don’t have enough cash left over to pay the new
mortgage — even if the new payment is lower than your current payment. The
remedy? Pay off as many outstanding bills as you can before seeking a
3. Maxing out your
A portion of your credit
score is calculated by comparing the total credit you have with the credit
you’re actively using. Say the credit lines on all your credit cards add up to
$50,000. If you’ve maxed out your credit, that’s a red flag for your lender.
However, if you’ve only used, say, $10,000, you situation looks under control.
Pay down debt if you can before you refinance. Here are some tips to help you improve
your credit score.
4. Using credit to make
big purchases right after you apply
Don’t buy a new car, don’t finance new appliances, and don’t take out a student
loan between the time you apply for a refinance and the day you get your loan
funded. Adding any new debts or monthly bills changes your financial situation.
Your lender might decide you now have too much debt or too little income to get
5. Having unfinished remodeling
If your lender sends an appraiser out to value your house and you’ve ripped the
off the front of your house, your unfinished
project can derail your refinance.
A lender will only give you a refinance if it thinks it can sell your house if
you don’t make the mortgage payments. A half-finished project would bring only
half-hearted purchase offers at a foreclosure sale.
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