So you want to refinance your home. Perhaps you bought when the rates were a couple points higher than now or maybe you have an adjustable rate mortgage you'd like to convert to a conventional mortgage. Current rates are inviting but the problem is with you. Maybe your credit is poor, you have excessive debt, you have negative equity, or your income has fallen. In this era when the flip side of lower rates is tougher credit requirements, the homeowner who could really benefit from a lower rate (and the lower payment) may not qualify to get one. Though it makes sense to mere mortals that lower payments are a better fit for people with less income or more debt, bankers don't think that way.
There is no quick fix to any of the barriers bankers might see to refinancing. They will look at the loan-to-value (LTV) ratio and hope to see 20%. If you have a low LTV, you could reduce the amount of your loan by making lump sum payments, assuming you have access to income tax refunds, savings, retirement accounts, bonuses, etc. You could also pay extra each month to reduce principle and interest on the loan. You could also pay down your debt, which would improve creditworthiness in the eyes of lenders. You could get a better job or a second job to improve your income picture. While any of these ideas are great in theory to help you qualify for refinancing at some point or to improve your long-term financial picture, you might not be able to do any of these things. A chat with your financial advisor is in order to discuss your options.
If your payment is too high, but your job is stable, and you would have no problem making a lower payment that falls within 31 to 38% of your income, you might be able to qualify for loan modification. Lenders have been looking more favorably at plans that lower payments to 38%, while new Federal plans aim for31%. To find out about whether this would work for you, contact your lender or a housing counselor at the Illinois Homeowner Assistance Initiative at (888) 995-HOPE.
The Marla Schneider Team will help you find your ideal home in Glenview. Move with Marla!
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