The article concerns the question – Do You Qualify For Mortgage Refinancing In Arizona? Mortgage refinancing involves paying off your current or existing loans with the help of a new mortgage or loan that can be of a more or lesser amount than the existing debt amount. In recent times, refinancing represents over 50 percent of the total mortgages in the United States, and the percentage is much higher especially in states such as Arizona. However, it needs to be mentioned that although the number of mortgage lending agencies are growing steadily in Arizona, not everyone can qualify for a refinance.
What are the disqualification criteria?
On what grounds can a borrower gets disqualified for refinancing largely varies from one state to the other. In Arizona the raison d’être for the disqualification of refinancing includes:
Delayed mortgage payment – A person who has made a delayed mortgage payment over the last one year is not qualified for refinancing. The state has put the number as 30 days past the due date and thereafter it is considered as late payment.
Low credit score – As per the FICO norm, most states in the US including Arizona has the right to disqualify a borrower from refinancing if his credit score is below 640. However, if the borrower has a genuine credit issue, he can go for a loan modification or seek expert financial guidance in order to improve his credit scores and thereafter gets qualified.
Not having a FHA mortgage – If your present home value is extremely low that is over 100 percent lower than your existing mortgage, there are serious chances that you would not be qualified for refinancing in Arizona. This situation often arises if you do not have a Federal Housing Administration (FHA) mortgage.
Low income to support debt – A number of candidates in Arizona do not get qualified for mortgage refinance owing to the reason that they do not have adequate income for supporting their debt. There is no need to look at this aspect as a criterion for refinancing if you already have FHA mortgage. However, if the current loan is more than 50% of the total pre-tax income of your family, it often becomes difficult to get refinancing in Arizona.
Taking the loan modification route
When refinancing becomes a difficult proposition, borrowers in Arizona and several other states are often advised to opt for loan modification. It is a process in which the lending agency reduces your payments by different ways that includes reducing your rate of interest or by improving the terms of your existing loans, among others.
As this process allows the loans to remain reinstated, it results in the amount of payment the borrower can afford. Unlike mortgage refinancing, loan modifications are extremely cost-effective. You can even get it free if you secure it from your lending institution directly.
However, loan modification has several disadvantages. In states like Arizona, it often proves to be of a temporary nature. For example, in Phoenix and Tucson, many lenders lower the interest rates only for sometime but they are not obliged to modify the loans. Therefore, it is always better to get qualified for a refinance, as it helps you to gain more financial control.