Want to Refinance? Rates Low, Oh Sorry, You Don’t Qualify.

Everyone has heard that rates are low. Prime rate has dropped 2%since last year. Long term 15 and 30 year rates are still at or below 6% for the most part. So, why isn’t there a huge refi boom going on? Well, it is starting but it will not be nearly the same as 2-3 years ago when we saw record billions of refinancing and purchases. The reason: liquidity and much tighter underwriting standards. There simply are not as many applicants being approved. Even though there are 95-96% of mortgages paying on time that were issued to good borrowers who are able and willing to pay their mortgages, the requirements have risen dramatically in an effort to eliminate the bad apples among borrowers and lenders.



That means that hundreds of thousands of applicants that should be able to refinance out of adjustable rate loans will not be able to because of new stringent requirements. These requirements usually are so high that many borrowers are simply denied even if they would have qualified last year at this time. The biggest group of folks facing denials are small business people and real estate investors who have wonderful credit and have never missed a payment in their lives. However, if income cannot be proved beyond a doubt on tax returns for the last 2 years, they will look like bad borrowers and will be denied any refinances or purchases. That may not make sense, but it is reality. The new lending requirement pendulum has swung way to the other side. Everyone knows things had to be tightened up because lending was not selective enough, but if it goes to far, it will delay a healthy market return because loans will be denied to borrowers who can really afford them!



So, what is the good news? Remember all 3 C’s of lending. If you have good Credit, easy to verify income with either tax returns or a W-2 (Capacity), and a home (Collateral) that has not declined in value, you will have no problem doing a refinance within your approved debt load. The rules are still tightening up, so what works today, may not work tomorrow. If you are going to get money out of your home, now is the time to get it before there are changes in the rules or in your personal situation that would disqualify you and lock up the equity in your home.

Reverse Mortgage Man
www.moneywise123.com
(866) 800-0280
http://forum.moneywise123.com