What You Need To Refinance Mortgage Terms

If you are looking at a possible interest rate adjustment that will affect your monthly payment, you will want to look at possible ways to refinance mortgage terms to a fixed rate mortgage. There are a number of new issues in the housing market that may interfere with your ability to refinance mortgage terms to a more reasonable monthly payment. The lending market, for one, has gotten a whole lot pickier about mortgages on the whole. If your situation has changed for the worst with the loss of employment or new debt, you may also be staring at an uphill climb. Take a look at some of the issues that might determine how easily it will be to actually refinance mortgage terms soon enough to avoid the hike in your monthly payment.

Your Local Realty Market

The drop in housing prices in some areas is all over the news. States like California and Florida have been severely affected. Even if you are making your mortgage payments on time, but want to refinance mortgage terms instead of selling, the drop in prices can affect your ability to do so. The loss of equity with a slash in home prices will be reflected on any new mortgage loan you want to take out. You can no longer have zero equity to buy a home and most lenders are expected between 10 and 20% of the home’s value as an equity cushion. If you don’t have that there, you might even be asked to pay down the loan in order to refinance mortgage terms. That might be preferable, however, to not being able to refinance mortgage terms at all.

You may actually be blocked from refinancing if your house’s value has dropped so much that you find you owe more on the house than it is actually worth. That is the condition of being “upside-down” on your loan. When that happens, you won’t be able to refinance at all without making up the difference and then some, which most people can’t do. Even if you have a great income, and stellar credit, if you are upside-down on your mortgage, it will be near impossible to refinance your home loan.

Change In Circumstances

Along with depressed housing markets, many people tied to previously lucrative areas that rode the mortgage boom are now facing unemployment or a loss of income. If you are a realtor, a mortgage broker, a construction worker, or anyone involved in this area, you have probably had a tough time lately economically. This drop in income can affect your chances of getting your home refinanced, especially if you’ve missed bill payments and your FICO score has dropped significantly. The best time to refinance mortgage terms is when your credit score is high, your house is worth more than you owe, and you have stable and profitable employment you can verify.