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Mortgage Refinancing Basics
Mortgage refinancing is the process of obtaining a new home loan to pay off an existing mortgage. The mortgage
refinancing process is nearly identical to purchasing a new home. The process typically takes 21 - 30 days and in
the end can save homeowners tens of thousands of dollars in interest over the life of the loan.
The Following Groups of People Can Benefit From Mortgage Refinancing:
- Those that have a higher interest rate than current rates
- Homeowners that have more than 20% equity and would like to consolidate their second mortgage
- Those that have an Adjustable Rate Mortgage (ARM) with an initial fixed interest term about to expire
- Homeowners that would like to consolidate other debts into their home to save money on interest
- Those that would like to eliminate mortgage insurance and have more than 20% equity in their home
Many lenders have similar credit and property requirements. If an individual's credit profile doesn't meet
current standards than the loan will be denied. Likewise, if a property doesn't meet current requirements the loan
will also be denied.
Credit Considerations:
- Credit score
- Income to debt ratio
- Employment history
- Two year income history
- Ability to prove income
- Ratio of available credit to used credit
- Judgments, leans, wage garnishments, ect.
Property Considerations:
- Loan to property value ratio (LTV)
- Condition of the property
- Stability of a homeowner's association
- Ratio of owner occupied units vs. rental units in a homeowner's association
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