08 Mar 2022
By Kevin Gahagan

Why Did My Application For A Refinance Get Turned Down?

Mortgage

Why Did My Application For A Refinance Get Turned Down?If you want to save money on your home loan, you might want to refinance. During the refinancing process, you could secure a better interest rate on your home loan. You could also withdraw cash from your home’s equity value to cover other expenses. Similar to a regular mortgage application, some refinance applications are denied. Why is this the case, and what should you do next? 

Your Debt To Income Ratio Is Off

One of the most common reasons why an application for a home refinance is turned down is that the applicant has too much debt. The lender will not want to refinance a homeowner who has too much existing debt. If you have credit card debt, car loans, or student loans, you may want to pay down some of this existing debt before you apply for a refinance. 

Your Credit Score Is Too Low

Your credit score is still going to play a significant role in your application for a refinance. If your credit score has gone down since you purchased the house, you may have a difficult time refinancing. You should always request a copy of your credit report and correct any issues on that report before you decide to apply for a refinance. 

Your Home Value Has Gone Down

The lender may also deny your application for a refinance if your home has gone down in value. Your home is used as collateral for the loan. If the home has gone down in value, the lender might be worried that the value of the home may not pay off the balance of the loan in the event you start missing payments. You may have to wait for the home’s value to go back up before you can refinance. 

Work With A Professional Team

If you want to refinance your home, it can be frustrating if your application gets denied. Fortunately, that doesn’t mean you cannot apply again. You should work with a professional team that can take a look at your refinance application, figure out why the application was turned down, and rectify the situation. Sometimes, an application is turned down simply because the lender doesn’t have enough information or the application was not filled out properly. 

25 Feb 2022
By Kevin Gahagan

How Can You Secure A Better Interest Rate When Refinancing Your Home Loan?

Mortgage

How Can You Secure A Better Interest Rate When Refinancing Your Home Loan?If you want to save money on your home loan, you may want to consider refinancing. During the refinancing process, you will replace your existing home loan with a new one; however, you want to secure the lowest interest rate possible. How can you get a better rate on your mortgage during the refinancing process? 

Consider Refinancing Your Home Loan To A Shorter Term

If you can create less risk for the lender, you can get a lower interest rate. One of the ways to do so is to refinance your home loan to a shorter term. If the average interest rate has gone down, you might be able to keep your monthly payments the same while paying off your home loan more quickly. If you can refinance to a shorter loan term, your lender might reward you with a lower interest rate. 

Consider Paying Off Your Existing Debt

You can also secure a better interest rate on your home loan by paying off your existing debt. This includes student loans, car loans, and credit card debt. You might want to use the proceeds from a cash-out refinance to pay off your existing debt. The lender might give you a lower interest rate if you have a better debt-to-income ratio. 

Always Check Your Credit Report Before Refinancing

Your credit score will also play a significant role in your interest rate. Before you refinance, you should request a free copy of your credit report. There might be inaccuracies in the report that you need to correct before you apply for a refinance. Furthermore, if your credit score has gone up since you purchased the home, you might be able to secure a lower interest rate from the lender. 

Secure A Better Mortgage Rate When Refinancing

One of the many benefits of refinancing an existing home loan is that you may be able to secure a lower interest rate. You want to get the lowest interest rate possible, so consider working with a professional who can help you put these tips will work for you. Getting a lower interest rate on your home loan could save you tens of thousands of dollars over the life of the loan. 

 

15 Feb 2022
By Kevin Gahagan

Making Sure You Are Ready To Take On A Mortgage

Mortgage Tips

Making Sure You Are Ready To Take On A MortgageThere is so much to know when it comes to homeownership that even wading into all of the information can seem overwhelming, but if there’s one thing you need when the time comes to purchasing a home, it’s to be prepared. Here are a few ways that you can ensure you’re ready for what a mortgage entails so that buying your dream home will be a positive experience you won’t regret.

Consider All Of Your Options

Instead of accepting the mortgage that your bank is offering you, it’s very important to do some research and determine what some of the best options out there are for you. While it’s entirely possible that the option pushed forward by your bank will work out, in the days of so much information online it’s silly to go into your biggest purchase blindfolded. Take some time out and read about the products available so that, when the time comes, you can make an educated decision.

Know Your Credit History

Lenders will most definitely be digging through your finances and credit history for anything that might make them leery of your financial state, but you’ll want to be aware of your own standing so that you can be prepared for what this might entail. By getting your credit report and score before going through the process of acquiring a mortgage, you can fix any errors that might be on your credit report so that you’ll be prepared for the result when the time comes for pre-approval.

Plan For The Future Possibilities

If the mortgage amount you are planning on paying seems feasible on a month-to-month basis, it’s certainly a good place to start, but if you not on a fixed rate mortgage, you will need to consider the ever-fluctuating state of interest rates, and you need to prepare for this reality at the same time. It’s important to base the amount you’ll be spending each month off of the income and expenditures that you’ve worked out in a budget, but you’ll want to add in some wiggle room so that a jump in the rates won’t sink your dream of home ownership.

There are many things to be aware of when starting the process of purchasing a home, but delving into your credit history and doing the necessary background research can make for a smoother experience. If you’re looking for advice on purchasing a home, contact your local mortgage professional for more information.

12 Jan 2022
By Kevin Gahagan

Does Shopping Around for A Mortgage Pre-Approval Hurt Your Credit Rating?

Mortgage

Does Shopping Around for A Mortgage Pre-Approval Hurt Your Credit Rating?Smart homebuyers know that mortgage rates and terms can vary widely among lenders. While your credit score and history will influence what rates and terms you’re offered, there’s a wide range of flexibility, which means shopping around for a pre-approval makes sense. At the same time, it’s important to minimize credit inquiries to protect your credit rating.

What is Mortgage Pre-Approval?

Mortgage pre-approval is often mistaken for mortgage pre-qualification. Pre-qualification is a process whereby the borrower personally submits their financial information to the lender. Pre-approval is the process whereby the lender does their own vetting regarding the income, debt and credit of a potential borrower. Pre-approvals will involve a hard “hit” to the credit score, due to the inquiry.

Pre-Qualification Doesn’t Guarantee Pre-Approval

Note that just because you are pre-qualified for a certain amount, that doesn’t guarantee pre-approval. So it’s important to go ahead and get the official pre-approval before shopping for a home. This will make you a more attractive homebuyer to sellers. 

Mortgage Hard Inquiries Make Credit Scores Dip

When lenders do a true pre-approval inquiry, it will make the credit score dip temporarily. This is an automatic process that happens because it looks like the person is looking to get more credit, which they are. Small drops from hard inquiries are temporary and will bounce back up in a short period of time.

Mortgage Inquiries Don’t Count

However, mortgage inquiries now don’t count on a credit rating, anymore. Lenders know that borrowers will be shopping around for the best rates and terms. As long as the inquiries take place in a short period of time, the inquiries will count only as one single hard inquiry, rather than multiple hard inquiries. In the event that multiple hard inquiries are noted on a credit report, as long as they are all from the same type of lender—a mortgage lender—it won’t count against the borrower.

The bottom line is that it’s wise to get multiple quotes when shopping for a mortgage. It’s more important to have a long-standing history of paying bills on time and managing credit well, than it is to worry about mortgage “hard inquiries.” Your real estate agent will help you to navigate getting multiple quotes in a short time span. Contact your agent to learn more.

16 Nov 2021
By Kevin Gahagan

What Is A High Enough Credit Score For A Mortgage?

Mortgage

What Is A High Enough Credit Score For A Mortgage?There are many people who are interested in purchasing a home for the first time. Even though many first-time homeowners are interested in the sticker price of a home, it is just as important to consider credit scores. Anyone who requires financing to purchase a home will have to go through a credit check. What credit score is considered high enough for a home loan? What do people have to do if they want to increase their credit scores?

What Credit Bureaus Do Lenders Use?

First, a credit score is a reflection of someone’s overall financial health. A lender wants to make sure someone has the ability to pay back a mortgage before they give that person a home loan. The higher someone’s credit score is, the more likely the lender believes he or she will have that loan repaid. 

In general, there are three major credit bureaus. They include Experian, TransUnion, and Equifax. Most lenders are going to run something called a triple merge (or a trimerge) when they check someone’s credit. This means the lender is going to check someone’s credit score with all three major credit bureaus before deciding if someone should receive a home loan. All three major credit bureaus calculate credit scores using the Fair Isaac Corporation, or FICO, numbers, but they calculate credit scores slightly differently. 

What Is Considered A Solid Credit Score?

Every lender has a slightly different metric, but a credit score less than 580 is considered poor. In contrast, a credit score over 800 is considered excellent. The maximum credit score someone can have is 850. If a loan is given to someone with a score under 620, this is considered a “subprime” loan. It is possible for people to qualify for a home loan with a low credit score, but they may be facing a higher interest rate.

Those who are interested in raising their credit score should pay all of their bills on time. It is also important for individuals to pay down as much of their debt as possible before applying for a home loan. This could help them increase their credit scores and get approved for a loan with a solid interest rate.