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If it’s getting harder to cover monthly household expenses, you may find yourself thinking about a mortgage refinance. However, lenders and interest rates influence how much money becomes available for you to use to pay down debts. Finding the option that puts the cash you need in your checking account often serves your best interests. Since there’s no obligation involved in obtaining quotes, you can shop around and choose the loan that works for you.
The typical refinance process starts off with getting your home appraised. A financial institution may look beyond potential borrowers’ credit scores or income history and consider other factors. Does the home’s neighborhood or location appear to have gone through sudden changes? Depending upon the financial institution, your application review could consider your property’s vicinity and the area’s growth forecasts. A mortgage refinance approval may hinge on whether market prices are moving in line with economic trends.
Location, nearby amenities, quality of public schools, and neighborhood demographics can influence the market values of residential properties. Financial institutions reviewing applicants often take into consideration whether property values are rising or declining in a neighborhood. Mortgage companies might consider a forecast that looks ahead several years.
Some homeowners assume their property’s structural characteristics will increase in value and add to their equity over time. This may be the case if they made improvements over the years, but the market reality may prove otherwise. While land values can appreciate over time, especially in areas with high potential and population growth, a home’s structural attributes may depreciate. Depending on the circumstances, a homeowner may look into making a few property improvements to help obtain more equity or a better mortgage refinance deal.
Homeowners with low or uncommon income streams may find it problematic to refinance through traditional mortgage lenders. Some financial institutions, for example, may have lengthy and detailed applications that also place limits on how much borrowers can apply for based on their income and debts.
Without showing a monthly income of at least three times the amount of a mortgage payment, a bank’s application review may raise doubts about an ability to repay the loan. In contrast to mortgage banks, nontraditional lenders often review all of the income streams that their borrowers can use. The nontraditional lender may, for example, include sources that some traditional mortgage refinance banks often fail to recognize as reliable earnings.
Your ability to make payments may come from a retirement plan, small business income or contract work. Some borrowers may receive financial support from the U.S. government or an ex-spouse, which not all banks accept as steady income. If you have bank statements showing income deposited regularly into your accounts, a nontraditional lender may use them to prove your ability to make payments.
One of the issues to keep in mind when researching your options concerns securing a payment plan with steady interest rates or fees that won’t change over time. Some traditional mortgage banks may attract borrowers with promises of low-interest loans, but they may come with surprise costs buried in their contract terms. Known as “adjustable rate” loans, these popular mortgage refinance plans offer lower rates during the beginning of a borrower’s repayment plan.
After some time, however, the payment amount on an adjustable-rate loan may increase to reflect a rate higher than the market’s average. The increase may occur after calculating a loan’s closing costs and late-payment fees or penalties. Despite what actions the Federal Reserve may take regarding interest rates, a loan with a fixed or steady payment plan could help you gain control of your finances by locking into a rate reflecting your current circumstances.
Before launching their refinance or loan plans, many applicants take the time to gather all of their information. Being prepared with the details regarding your property, sources of income, and current monthly obligations can expedite the application process.
Lenders can overlook spotty credit or temporary financial issues. If you’ve been thinking about ways to set up a mortgage refinance or make improvements to your monthly debt load, find the plan that fits you and offers the interest rate you deserve. By making a connection with the right lending source, borrowers can qualify for their best options even with fixed incomes or earnings from self-employment. Contact us at Billy.com today and we’ll get you to the lender that works for your situation.
Give us a call: (888) 293-3928 or email us at contact@billy.com.