The relaxation of trade underwriting norms resulted in more people being able to buy a home, getting their home refinanced, and even drawing out a part of their equity to spend on luxuries like cars or boats.
Recession changed things
The recession made that a thing of the past and more homeowners found themselves unhappy with the state of their loans. Lenders became more rigid regarding their requirements for people seeking to refinance their homes, and homeowners found that they owed more than their home value. In those days, it was not easy to calculate the right home value, but today you can just go to Neighborhood IQ and get a free home value report.
In recent years, things have changed a lot in the home refinancing market. The economy is improving and people are getting back to work. Homes that were valued almost negatively some years ago are now approximately worth the original loan amount and homeowners can be eligible for refinancing unlike as in the past.
When lenders speak about changes they’ve experienced in refinancing of a home in the past few years, they mention that they’ve only got back to the underwriting standards of the pre-housing boom. The scene is somewhat similar to what it was 15 years ago.
These days there is more paperwork involved in getting a home loan. This is because previous lenders readily gave loans, whereas they are more selective and cautious today.
In the past, homeowners often followed a practice of “serial refinancing” for their houses. That is history now.
Present Day Refinancing Scenario
With changing times, refinancing a home today is quite different from what it was about five years ago. Here are some guidelines regarding how to overcome present day issues:
Involvement with Neighbors- For an entire association of homeowners, if 15% or above of the total outstanding amount is defaulted, the unit cannot be refinanced. The only solution is to encourage all your fellow members to pay up.
Increased Paperwork – Detailed documentation of income is required for refinancing your home. Legal regulations stipulate that lenders must prove that borrowers will be in a position to pay back the loan. This requires additional documents like pay stubs, tax returns, and bank statements.
Good Credit Ratings – A few years ago, minimum or no credit might have been sufficient to get a loan approved, but not anymore. Experts suggest getting a free credit report and checking for inaccurate information. It is also a good idea to get the right value of your home. A free online home value report can be generated at Home Loan Advisor.
Longer Waiting Periods –When interest rates are at historic lows, lenders are quite busy and an approval may take longer. To speed up the process, respond promptly to document requests and cooperate as best as you can. Delays from your end can jeopardize your locked rate of interest and may lead to extension fees.
Keep up with the present day refinancing scenario to get the best deals!