The mortgage crisis has left many homeowners in hot water, and the recent decline in the economy certainly has not helped many consumers. However, perhaps one of the most affected people by the volatile economy are those home owners who are presently in a home and are “upside down” on the value of their home. In this case, there are several concerns that are to be addressed when even considering refinancing, but in certain situations, a homeowner can seek to ways to remedy a refinance mortgage upside down.
Being “upside down” on your mortgage means you owe more money than the value of your home; therefore, a refinance mortgage upside down could be a great alternative to someone facing payments on a mortgage that is not necessarily getting them any value. Be aware though that lenders are stricter than ever with mortgage qualifications, and equity plays a big part in approval. Therefore, before approaching a lender at all about a mortgage refinance upside down, prepare yourself with these simple steps.
First, take a good long look at your credit report. Credit, income, and equity all determine the risk of a loan for lenders and the better your credit is the more eligible you are for a new refinance mortgage upside down. Correct any problems on your report such as errors, derogatory items, and late payments. Pay down debt and avoid any big purchases until after refinancing. These simple steps can help improve your credit score and make you all the more eligible for a loan.
Secondly, take a good long look at your home. Is there anything you can do to improve the home’s value? Even if you are “upside down” on your mortgage and need a refinance mortgage upside down, repairs to a property, cosmetic updates, and landscaping can drastically increase a home’s value. Lenders are going to want an appraisal anyway, so be sure to have your property in tiptop condition before pursuing a refinance mortgage upside down.
Lastly, be meticulous about who you choose for a lender. Don’t go with the first person who guarantees you an approval since sometimes that can be risky. You will want someone who has a longstanding reputation in your community that can tell you what your home’s true market value is. Local lenders typically know the market better than anyone else does. Above all, proceed with due diligence and if a refinance mortgage upside down sounds too good to be true, it may definitely be. Read the fine print on all documents and make sure you know what you are agreeing to before signing on the dotted line.