Overcoming Refinancing Difficulties
You may have noticed it… but lately, applications for refinancing don't go as smoothly as they once did.
Listed below are examples of hurdles most refinancing applicants have had to face recently and suggestions on how to go around them.
Low Appraisal Values
The appraised value of a home was not a roadblock to refinancing when home prices were still going up. However, most homeowners who are looking for a new mortgage are faced with a different situation. Most of them are being given lower-than-expected appraisals, although it's not always because prices really have gone down. One factor that brings appraisals down is the fact that many appraisers are simply unfamiliar with areas they are working on. This lack of familiarity drives home prices down.
A possible solution is to click on a web site known as Zillow.com and print out the recent prices of other properties in your area. Make sure you get prices of properties that are similar to your home. Present the information to your appraiser. You may also want to go to open houses in your area. Note down prices you see and don't be shy about informing the appraiser of what you have learned. If necessary go to a second appraiser.
Condos
A building that has several foreclosures will simply not be able to get high appraisals. This is the main problem of having a condo unit. Multiple foreclosures in the building where your home is located or short sales will drive prices down. If you don't have equity, then you have no choice but to apply for a mortgage modification. However, if you still have equity, your best recourse is to go back to the lender holding your mortgage.
You will have to exert a lot of effort by calling them all the time. Keep in mind though that in situations like this, your current lender stands to lose the most.
Low Credit Score
A low credit score is a problem for any borrower, but this is especially true for homeowners looking for a refinancing. Changes in credit limits due to current economic conditions may cause your credit score to drop 20 to 30 points. This will certainly hurt your chances of getting a refinancing. The key here is to find out why your score dropped. Call up the credit card company that lowered your credit limit. Maybe it's a decision based on wrong information.