Denied a Refi? Here are some other options to get you back on track…
Why Lenders Reject Refinance Applications
A lender may reject a home refinance application for a multitude of reasons. Chief among them:
- Weak credit score and credit history: Lenders don’t like to see late payments and collection accounts on a credit report, since they may be indicators of financial irresponsibility. They may also hesitate to offer the loan if your credit scores are too low. The scores used by lenders typically fall somewhere on a range of 300 to 850, with a score of at least 620 being what many mortgage refinance lenders are looking for.
- Income issues: If your lender believes your income is too low to handle the payments on a new loan, it may reject your application. Inconsistent employment also falls into this category: Lenders like to see that you’ve held a steady job for at least two years.
- High debt-to-income (DTI) ratio: Your DTI is the total of your monthly debt payments divided by your gross monthly income. If your DTI ratio is greater than 50% (or sometimes 43% depending on the lender), many lenders will reject your application because it will appear that you’re overextended.
- Low home appraisal: If the appraised value of your home is less than what you owe, you won’t be able to refinance.
- Insufficient equity: In general, lenders expect you to have a minimum of 20% in home equity to refinance. And if you owe more money than the home is worth, you’re what’s known as “underwater,” which usually results in an automatic denial.
What Options Do I Have Now?
- Sell Your Home: If you have found yourself in a situation where you need to now sell your home because it’s underwater, you can no longer keep up with the maintenance, have fallen behind on taxes or have received violations…URB Chicago will likely want to make an offer to purchase your home. Even if we don’t buy your house, we would love to take a look at your housing situation and resource you with our 35+ years of experience and knowledge. If you have any questions, or just aren’t sure what to do…We’d love to help!
Since 1986, URB’s cash buying process has been the stress-free way for Chicago’s west side and south side homeowners.
Selling your house “as is” to URB for cash, means you do not have to spend money on repairs, cleaning, or even showings. Which is a perfect scenario for someone who was needing to refinance.
There are no commissions, we take care of the paperwork, pay typical closing costs, and can close as quickly as 7 days.
You can count on that our fair cash offer will not change before closing, and there won’t be any surprises.
Here is our website: www.urbchicago.com, Give us a call today (224) 601-0218!
- Begin to work on your credit, here’s how: There are many credit repair companies out there that can work with you to have the bad remarks removed from your report. The Fair Credit Reporting Act allows them to contact the credit bureaus directly to ensure that the content of a credit report is not inaccurate, misleading, incomplete, or unverifiable in any way. If the bureaus are unable to prove that an item is accurate or cannot complete their investigation in the timeframe given by law, they must strike the item from the report.
We have used this company, and had great success: https://nationalcreditcare.com‘
- Dig yourself out of Debt: Sometimes it just takes time: Everyday counts, though! Start now to pay down your debts and slowly add towards the equity of your home. If you need help managing your debt, we love to suggest following Dave Ramsey’s Solution. He has a 7-step approach to financial freedom, and will help you learn to better manage your money and get out of debt!
Here is the link to his 7 Steps: https://www.ramseysolutions.com