subject: Tougher Mortgage Refinance Requirements Might be on the Way [print this page] Recent low mortgage rates have brought out many homeowners to refinance their home mortgage loan. Many applicants want to take advantage of these rates and lock them as long as they can. In uncertain economic environment, certainty of fixed monthly mortgage payments is very appealing.
It has been getting tougher to get mortgages and it may get even tougher. Mortgage interest rates have been hitting record lows in recent weeks. As a result, there have been substantial increases in refinance home loan applications. A few lenders show sign of tightening their lending criteria. This could be temporary due to high number of applicants. However, it is unlikely that refinance home mortgage loanlending terms will be eased in the near future.
Mortgage industry has been getting thinner with substantial lay offs. Mortgage lenders might find it easier to find a way to select the best applicants fast, rather than start employing again. This will result in good applicants being turned down without due consideration. Some mortgage lenders might see this asa chance to strengthen their loan books with highly qualified borrowers. Therefore, they might offer more of a better credit refinance products bysetting higher credit score requirements for applicants.
Probably the first signs would be that they would spend less time on incomplete applications. At these times, lenders might be reluctant to seek further information and return incomplete applications. Refinance mortgage applicants are advised to be well prepared. They should fill their applications carefully and include all the relevant documentations. It is a very good time to be sorting out home mortgage payments; they should not miss on that because of silly mistakes. In addition, returned applications will waste time and have credit score implications. Nobody knows how long these rates will last. There is clearly no need for the lenders to compete for business when they have many applicants. This is a natural selection process. When there is too many of something, the stronger will be chosen. It is not because the lenders are making less money due to low mortgage refinance rates. They still can keep their margins, as they pay less for the money they lend.
The message could be that homeowners should implement refinancing plans when they can. Although even lower rates would be lovely, it might get harder to get mortgage. Already many homeowners could not take these low rates for many reasons. Low home valuations is one of them and high down payment requirements is other.
Stricter home loan requirements might come in many forms. They would add up to be a real problem. For example, most home valuations are instructed by lenders. They could easily prefer more conservative surveyors to carry out the valuation. This would give them extra cushion of safety against house price drop. In addition, surveyors might choose to be cautions themselves worried about possible liabilities.
Any further constrains will make more people ineligible for mortgage. That is why it would be wise to look into refinance options now.
Tougher Mortgage Refinance Requirements Might be on the Way
By: JS Lee
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