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Question:
DEC 12, 2011

Advice on Qualifying for a Refinance Loan

When refinancing do you have to fix up your property?

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Bill's Answer: Bills.com Resident Expert

You are asking what will increase the probability of getting a refinance loan completed at beneficial terms. When a lender analyzes a potential borrower's credit worthiness, they typically look at three core factors:

  1. Debt-to-income ratio
  2. Credit history
  3. Loan to Value (LTV) ratio (otherwise known as equity)

If you improve your home through home remodeling or fixing it up (including adding square footage) it might increase the appraised value of your home, thereby lowering the Loan-to-Value calculation.

However, you have to trade-off what the cost of fixing up the property is against what you will save due to a lower LTV. I recommend chatting with a mortgage loan officer and maybe even negotiating for a free appraisal or loan quote.

If you want an introduction to pre-screened mortgage lenders, Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the refinance loan page and find a loan that meets your needs. If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened lenders contact you to discuss the refinance options available to you. These lenders should be able to tell you the loan terms available to you based on your current financial situation, and tell you if a refinance loan can help save you money over your current loan.

I wish you the best of luck in finding a loan the meets your needs, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.bills.com/

Comments (5)


GramJ Z.
Bell Gardens, CA  |  March 22, 2011
Thanks for the information on how refinances are evaluated. All of these factors seem to play a crucial role. Even when something as simple as a home remodeling loan is under consideration, it seems like all of these factors are included and considered with due weight.
Ginny C.
Highland, UT  |  March 15, 2011
Thanks for the help with home refinancing. My husband and I are thinking about doing some home remodeling in the hopes that it will help us with our equity. While I would love to live in a nicer home, I am scared that this will negatively effect our home refinancing. Thank you.
Home Remodeling Z.
Bell Gardens, CA  |  March 03, 2011
Thanks for the concise explanation on this matter. There are a few factors to balance when considering a refinance and the loan to value ratio is one I was previously unaware of. I had always assumed that home remodeling would always be a beneficial project for a home, but the advice to consult a broker seems quite sound when trying to account for all three factors.
Nithin .
September 25, 2008
Your work history is one factor that a lender will examine, when judging your qualification for a mortgage loan. Lenders usually require a minimum of two years working in the same industry. Changing jobs is not a problem, but changing your line of work very well could be. A lender wants to know that your income is going to be steady. When you have no history of producing income in the new career, lenders are likely to view lending to you as too risky.
Adam .
September 24, 2008
If I change careers with no gap in employment status will this affect my ability to refinance my arm. My current trade is taking a pretty hard hit due to the economy. And i don't think it will bounce back any time soon.
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