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For
every mortgage, and every mortgage lender, there are three main
qualifying criteria
which are
used to
qualify someone for a home mortgage refinance loan. These criteria
are: your income, your credit, and your equity in the property.
| Income: It is very important to lenders that you have a steady source of income from a full-time job. If you are in the market for a home mortgage refinance loan you will want to have a steady job for at least the prior year or two. By having steady income you are able to show the lender that you can pay the monthly payments on your home mortgage refinance loan. By having steady income you reduce the risk to the lender that you will not repay the mortgage loan. By having gaps in your work history, or a lot of positions over a short period of time, the lender may see you as a risk for unemployment or late payments. |
If you are self-employed then you will have a much harder time obtaining a traditional home mortgage refinance loan. You might want to opt for a “No Document” option where your interest rate will be a bit higher but you will not have to work as hard to prove your income.
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Credit: Another important consideration for any home mortgage refinance loan’s success is your credit scores. Your credit score is directly impacted by the debt load you carry and the payments which you make or don’t make. It is very important to pay each of your bills and obligations on time. By having late payments, especially on a mortgage, you are showing your potential lender that you may make your payment late.
If you will be shopping for a home mortgage refinance loan, you will want to avoid any negative marks on your credit. Some of the worst negative marks come from foreclosures, bankruptcies, charge-offs, and collection accounts. These must be avoided when at all possible!
Another negative for your credit scores, is having high balances compared to your credit limits. If you have a $5,000 Visa and every month you carry a balance of $4,990, you are showing your potential lender that you likely live on credit and on the edge. You should always carry a balance of less than half of your credit limits.
Equity: The third mortgage criteria you need to be aware of is equity. Your equity in your home is equal to the market value of your home minus your mortgage debt. This is the portion of your property which you own. For example, if your home is worth $200,000 and you have a $100,000 mortgage, then your equity is $100,000. The more equity you have, the more you have to loose, the more likely a lender will be willing to lend to you.
By understanding your income, credit and equity and how they pertain to obtaining a home mortgage refinance loan, you are well on your way to getting the best mortgage possible.
| More Information: Bad Credit Refinancing — Nearly everyone goes through a bad time financially at some point in their lives. Unfortunately this time can sometimes coincide with the need to obtain a mortgage or refinance an existing mortgage. Finding a good mortgage is still possible even with bad credit. Generally bad credit mortgage refinancing is easier than trying to find a lender for a primary mortgage. |
©2009 Best Refinance Mortgage Rates