"Can I still refinance my mortgage?" is one of the most common questions asked by homeowners in the wake of the credit crisis that began in 2007. It began with defaults on home mortgages and soon inflicted all manner of carnage on the world's financial markets. The number of delinquent mortgages held by beleaguered Freddie Mac jumped 241%, from .46% to 1.1% from August 2007 to August 2008.
Bank failures, consolidations, and mergers hit record highs, as even huge banks such as Washington Mutual and Wachovia fell or were taken over by the feds to avoid collapse. Many of these had invested heavily in sub prime or other risky mortgage products and paid a dear price. Other banks faced serious problems as the value of their collateral, the very homes for which the mortgages were written, faced a write down as the value of residential real estate slumped.
With all this turmoil can you still refinance your home mortgage if you need to get out of an adjustable rate mortgage or take advantage of low interest rates? Thankfully, the answer is "yes", although your options in this regard are certainly more limited than they were in 2006 or early 2007. Although we're not deluged by mortgage ads on the radio singing the praises of ill advised, yet very creative mortgage products, there are still refinances to be had.
What can you do to be sure you are in the best position to refinance your mortgage in the face of stiffening lender requirements? After all, the days of lenders taking a page from the military, and adopting a "don't' ask / don't tell policy" regarding income, credit rating and employment history are gone for good. Only the prudent lenders have survived, and the financial sector's pruning isn't over as of this writing.
I your credit is golden, for example your FICO score is over 780, you have 25% equity in your home, and it's not in an area that is experiencing rapidly declining home values, you can proceed almost as before. You should have little trouble getting a refinance. If you have a slightly lower credit score, say between 750 and 779, you still stand a good chance of getting a refinance at an attractive rate.
It's when you start falling below the excellent credit scores, and have less home equity to protect the lender's position that things become a bit tricky. Then you must do your homework and have a plan to get your home refinanced at an attractive interest rate. Don't despair, though, you can still get a refinance in many cases.
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