Your Checklist for Qualifying to Refinance Your Home

Your Checklist for Qualifying to Refinance Your HomeIf you want to qualify to refinance your home, set yourself up for success by using this checklist.

Mortgage rates are still at historic lows, which makes it a great time to refinance your home loan. You know that there will be some closing costs involved in refinancing, but you think it would be worth it to lock in a low rate.

If you’re ready to refinance your home, qualifying to do just is your primary obstacle. To help you qualify, we’ve put together this checklist.

  • Have 20 percent equity. If you don’t own very much of your house, lenders aren’t going to be very interested in refinancing it. If, however, you have at least 20 percent equity, you’ve proven that you have a vested interest in holding onto your home. To determine your equity, divide how much you’re trying to borrow by your home’s value (check recent neighborhood sales to get an idea of current values). That’s how much you want your lender to pay, and the leftover that you own needs to be above 20 percent.
  • Have solid credit. In order to get approved for refinancing, you’ll need to show that you’re financially responsible. Lenders determine your responsibility by checking your credit score. Generally, if you’re not at 600, you won’t be able to refinance at all. Other lenders use 720 as their cutoff.
  • Have little debt. Since you’re going to be taking on the debt of your home refinance, lenders want to know you won’t be stretched too thin when combining that with your other debt. Try to keep your debt to income ratio below 38 percent.

If you want more information about refinancing your home, contact Avis Lending. Our Irvine, California and Lahaina, Hawaii teams are here to make sure you have the information and resources you need to refinance so you can get the best rate on your mortgage. Call us today!

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