Refinancing your home can be a tricky and complicated process. However, those in need of restructuring can streamline the procedure by being prepared. MainStreet is helping out homeowners by identifying some common roadblocks to refinancing. We’re all offering some suggestions about how you can get around them.
A DECREASE IN THE MARKET VALUE OF YOUR HOME
Thanks to the current housing market and the subsequent decrease in property value, many homeowners incorrectly appraise the value of their houses when applying for a specific refinancing loan.
“Clients have an idea in their head based on a previous appraisal from a year ago or based on what they paid for the house,” mortgage consultant Jeff Tufford tells MainStreet. “In reality, lenders have appraisers derive the value based solely on what similar properties in a certain time frame and within a certain distance have sold for.”
While an inaccurate estimation of a house’s worth is the most common of all refinancing roadblocks, it is also easily circumvented. Dominick Sutera, Director of Business Development for Academy Mortage Corporation and certified mortgage instructor, suggests that homeowners ask their local real estate agents to prepare a Competitive Market Analysis (CMA) so they can get a good idea of the current market value of their home.
“This is a free service that real estate agents offer,” Sutera explains. “It should be more accurate than using Web sites (for the appraisal).”
HIGHER CREDIT SCORE REQUIREMENTS
A low credit score and an accompanying incurrence of debt will make refinancing more difficult on any owner. What complicates the process currently is that credit score requirements for many loans have significantly increased.