With the state of the economy nowadays, more and more people are searching for ways to make ends meat. Mortgage refinance is a good option because it may allow you take on a smaller mortgage payment or reduce your interest rates. The problem with applying to refinance your mortgage is that, after submitting your application you may experience refinance rejection and find that you do not qualify.
To help your odds of acceptance for your refinancing, I have compiled a list of the top five reasons that may disqualify you. This should help ensure that you have the best opportunity of mortgage refinance from the start.
Your Credit Score Is Subpar:
The first thing that your lender will check is your credit score. Your personal credit report, from all three major credit agencies, will be easily accessible to the lender, so you must be ready for it. Having past financial troubles is an indication that you are not truly trustworthy in the lender’s eyes, so if you have had previous defaults on loans or a bankruptcy, that could be grounds for immediate refinance rejection.
Lack Of Sufficient Funds In The Bank:
When applying for a mortgage refinance, it is imperative that you remember that you will have to pay anywhere from 5-25 percent out of your own pocket in fees and such. Your lender may look in your bank account and your past spending history. This is about financial trust again. They have to be able to see that you are responsible, so they can justify lending you the money. If they have a reason to believe that you will not be paying the remaining balance, they may decide to reject your application.
Already Struggling With Debt:
Having too much debt is always hard, and lenders understand that. If they see that you have two or three credit cards maxed out and other bills that you have been meaning to pay off, but haven’t quite gotten to yet, they may use that as an excuse for refinance rejection.
If you are able to maintain a healthy financial record, have proven that you are able to make sound economic decisions, and if you are always paying your bill on time, you should be fine when applying for your mortgage refinance. If you are unsure of what your credit score is looking like, it may be best to check that out before submitting your application. It may save you a lot of heartache and time.
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Lack of sufficient funds can really affect fast mortgage approval. I know of someone who had enough funds when they applied, went and bought new furniture for their new house, then at the end of the process the loan was denied because the percentage of funds in the bank dipped below their minimum required.