The other factor in qualifying that many forget about is the property; it too has to qualify as good enough to lend against in the eyes of the lender. Banks and mortgage companies have been caught with so much sub-par property that every house has to go through an underwriting appraisal process in order to determine if it is suitable to finance. If there is something wrong with the property then either repairs have to be made or the deal will not go through.

Of course, there are loans such as the 203K that is made for renovating and repairing a house. If you find you are in a situation where the property needs a lot of TLC, a 203K might be the answer to your prayers as long as everything else is in order.

Even if you are okay with your payment on your 30 year fixed mortgage you may be able to pay very close to what you are currently paying and qualify for a 15 year fixed mortgage. This alone can cut out an amazing amount of interest that you would pay over the years. It is at least worth looking at because we may never get back to these amazing rates again.

Second, since rates have been low for several years, it doesn’t make sense to refinance a house if you start out with a pretty good rate. You will need to at least get a point better; 6% current rate and 5% for new mortgage, as well as be able to pay all the costs within the next 24 to 36 months. No need to refinance if you plan on moving in the next few years. Just think through the process and, if you believe you can qualify, give me a call.

• Will I stay in this house long enough to recoup the closing costs of a refinance? This is traditionally 4 to 5  years.
• How much will this actually cost me to do a refinance and am I willing to pay that?

Most people just see the interest rate as lower and assume (you know what they say about assumptions…) it’s a better deal. However, that is just not true in many cases and as much as the regulators have tried to protect the consumer, it is still up to you to make the final decision. And making that decision is not always an easy one. This is just one reason to work with someone who can fully explain your cost and show you how much time it will take to pay those cost in savings to your payment.

If you are considering a refinance for your home it is also a great time to take a look at your homeowners insurance as well to make sure you are fully protected. Insurance is another place you need someone that can explain the in’s and out’s for you so you don’t get caught not able to fully rebuild or recover from a loss.

What a loan officer can do is show you different options and loan programs so you may fall within the tolerances of the numbers and be approved for a loan. We can also help you find a program that may help you with down payment money or get approved for a different type of loan program. Some are dependent upon income, family size or location but you won’t know unless you ask. Just remember; what we cannot do is mess with the numbers as they will always tell you the truth.

The problem is that lenders don’t lend on what you plan to do but on what you did over the past two years. That means the financials you are turning over to them are most likely the worst you have had in the decade thus a refinance is not an option for you. What you can do is request a home loan modification through the Loss Mitigation Department of the company who is servicing the loan. This is not a slam dunk either as you have to show hardship; loss of job, income, etc. and you do have to qualify for this as well so be prepared to show financials, bank statements, etc. just like you do when getting a loan.

Though this can be time consuming, it is worth the effort of you are in a position where you are really struggling to pay your mortgage. You can also approach the company who is servicing your second and do the same thing. These sometimes go through Loss Mitigation and sometimes not depending on how large the institution is. The key is to stick with it and not let anyone bully you. You are in a temporary situation and that will change in time.

What most people are referring to as a “no cost” loan is a loan where you don;t have to come out of your pocket with money in order to get it closed at a better rate. The problem with this is that is does actually cost you money at some point. The money is coming out of your equity and most people don’t count that as actual dollars but they should! When you sell your house, those dollars are lost in fees and costs for the loan and you won’t get them back. Unless you have a really large reduction on your rate or stay in your house and don’t refinance again and pay it off in full you run the risk of never recovering your money. Make sure your loan officer goes over the true cost of the loan before you ever close it; purchase or refi.

Today, most of you don’t have this type of relationship with a banker and, even if you do, he has a bunch of rules and regulations that has to be followed and really has no say about what you can or can’t borrow for a house or anything else. Part of the system to judge whether you are good for the payment is by judging your credit. Many people have either made a mistake or two or had a period of bad times that hit and have affected their credit score so even if they are not serial non-payers, they will have a hard time getting loans under these regulations. It’s a flawed system but so far it’s what we have to judge mass borrowing. Most banks will lend to those with a 640 mid score or better and mortgage companies a 620 mid score or better.

That is not to say that seconds don’t come in handy and can’t be used to make a deal work for the borrower. It does mean that you do need to have a mortgage guy that can be creative and work the numbers until they can get the best deal for you. I also would tell you to look around at who you know. Do you have a relationship with a banker, a military bank or credit union where you might be able to get a second? If so, call and find out what your options are and communicate that with your loan officer. Who knows, you may just help orchestrate a great deal for yourself!

No matter what your situation, your credit score or how much money you are worth on paper, you must qualify with ALL payments on ALL properties. If you have been a landlord and show it on your taxes, that’s great. If you are just starting to rent your property or don’t show it on your taxes, you can’t count that money as money on earn against the payment. If you own a home and are moving to another, you must qualify with both payments; period. It’s the same if you are purchasing a second home as well. The underwriter wants to make sure you have the income (not the cash on hand) to pay for all your debt and still be within the guidelines. Full Doc and Full Disclosure.