Despite strengthened economic activity, mortgage rates are continuing to edge higher and higher. With an average interest rate of 3.63 percent on homes with a 30-year fixed-rate mortgage, homeowners shopping for refinancing opportunities are frustrated. While the market is becoming favorable for sellers, current homeowners struggling with mortgage debt are having a harder time. For those struggling with mortgage debt, there are common issues that make refinancing difficult.
Common Roadblocks for Mortgage Refinancing
For those struggling with mortgage debt, refinancing to get new loan terms is one of the more appealing solutions. Homeowners can take advantage of lower interest rates, consolidations, manageable monthly payments, and much more! By knowing the common culprits behind refinancing struggles, you’ll be able to find new loan terms that are more favorable for you! Common roadblocks include:
Lukewarm Credit. Sure your credit isn’t “bad,” but if it’s not good either, you’ll have a difficult time with mortgage lending. Remember, each lender has a qualifying credit score for their refinancing terms. More than likely, you will have to have a credit score in the 640 to 740 range. The higher your credit score, the more chances of refinancing success you’ll have and the better the terms will be.
An Underwater Home. Values aren’t rebounding equally across the country. If you owe more than your home is worth, then it will be very difficult, if not impossible, to get a refinancing offer. Fortunately, the Home Affordable Refinance Programs, backed by Fannie Mae and Freddie Mac, help underwater homeowners that are struggling with mortgage debt.
Income Considerations. If you’re one of the million Americans who lost a job during the recession or if you missed even just one mortgage payment, the road to refinancing will be substantially more difficult. Missed mortgage payments or not enough income can stymie the refinancing process. To avoid this setback, be sure to be timely on payments for at least 12 months before refinancing.