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As home prices fall will you be able to refinance?

Posted by  on Mar 16, 2012
 

U.S. home prices fell 1.3 percent in October 2011 from a month earlier, the third month in a row of declines. Home prices were also down 3.9 percent from a year earlier, according to CoreLogic. Excluding distressed sales, which include short sales and REO transactions, home prices fell 0.5 percent from October 2010.

Weak housing demand

"Home prices continue to decline in response to the weak demand for housing. While many housing statistics are basically moving sideways, prices continue to correct for a supply and demand imbalance. Looking forward, our forecasts indicate flat growth through 2013," said Mark Fleming, chief economist for CoreLogic.

States that saw the biggest drop in home prices were Nevada (down 12.1 percent), Illinois (down 9.4 percent), Arizona (down 8.1 percent), Minnesota (down 7.9 percent) and Georgia (down 7.3 percent). Those that had the highest appreciation of home prices were West Virginia (up 4.8 percent), South Dakota (up 3.1 percent), New York (up 3 percent), District of Columbia (up 2.4 percent) and Alaska ( up 2.1 percent).

Can you refinance?

For many homeowners, falling home values make it tough to get a refinance package. But if you still have some home equity there may be hope for getting approved for refinancing. Here are some of the things that will influence whether or not you get a loan.

  • Not having negative home equity. Too many homeowners have found themselves owing more on mortgage loans than their properties are worth. For many of them refinancing is out of the question. But if you are among those who still have equity or are just slightly underwater, you might be able to get approved for refinancing by bringing cash to closing. Raising your equity stake may make mortgage lenders more willing to approve a loan.
  • Good credit is a must. America has some of the lowest mortgage rates ever, but many people have had a tough time refinancing because of their credit. Only people with the best credit scores will be offered the lowest mortgage rates. Get mortgage quotes from several lenders to find the best deal.
  • Is your employment situation stable? Mortgage lenders want to know that you have a reliable source of income to continue making mortgage payments each month. When you apply for a loan you will be expected too provide documentation for any sources of income, as well as other details of your financial situation. Too many homeowners have lost homes after going through a job layoff or taking some other financial hit.

Ultimately, whether or not you get approved for refinancing will depend in large part on how much your home is valued at. Make sure the home appraiser has all the information necessary about your home, such as improvements or renovations, and surrounding properties to get the best valuation possible.

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