Applications for refinancing that would not have encountered hurdles in the past aren't going as smoothly now, according to Bankrate.com. The real estate bust and economic downturn created new obstacles for borrowers. See tulsaworld.com/BANKrefinance and tulsaworld.com/BANKbeatREFIhurdles.
Appraisal: When housing prices were up, appraised value was seldom a roadblock to refinancing, but this is not the case now. Homeowners are increasingly getting appraisals lower than optimum, often because of falling home prices in their area. This can also be because of changes in the industry's sanctioned appraisal process to ensure impartiality. More appraisers are working in areas they're not familiar with, and this often means they'll undervalue properties. See how to avoid low appraisals at tulsaworld.com/BANKbeatlowappraisals.
Homework not for dog: To ward this off, you must do your homework or have a local real estate agent "pull the comps" (comparables) — the recent sale prices of properties similar to yours in your area — and visit nearby open houses. Armed with these prices, you should get an idea of the real value of your home and should not be shy about sharing this with the appraiser. You should challenge an appraiser who overlooks key facts, such as the home's strong points. You might even need a second appraisal when the first comes in too low. See Bankrate's "10 tips to buy or sell real estate in 2010" at tulsaworld.com/BANKbuyorsellhome.
Condos: Comps might not always provide a favorable appraisal, and this is common with condos today. With multiple foreclosures or "short sales" of a building, there's no way to get around this. Without equity, a borrower's only recourse is to seek mortgage modification. See tulsaworld.com/mortgagemodification.
But if the condo owner still has equity, the best solution is to go back to the lender holding the original mortgage, as he has the most to lose and will be easier to coerce. Insist on a refinance and not a modification. Persistence rules the day, convincing the lender a refinance is in his best interest.
Falling credit score: A low credit score has always been a borrowing barrier. Adjustments by credit card companies yield unanticipated results for homeowners. When you got the first mortgage, your credit score was probably fine, but now, something as simple as a reduction of your credit limit or a spike in interest rates often dramatically lowers your credit score. A drop of only 20 or 30 points can make a big difference in the interest rate a borrower is going to charge you for a refinance. See how to improve your credit score in the Feb. 23 Action Line at tulsaworld.com/Action022310. Original Print Headline: Keep upappraisalvalue fordwelling
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