There are plenty of reasons why you may opt for a home refi in Fort Myers, FL. For one, it allows you to borrow on your home’s equity. For another, you can get rid of mortgage insurance. And you can also reduce your monthly payments or shorten the term of your loan with it. Given the value refinancing can give, it makes sense that you exert all your effort for higher chances of approval. With that said, here are the top items you should work on:
A FICO score of 620 or above is necessary for most refinance applications. Although some lenders may accept a lower score, the interest rate is likely higher. A healthy credit score is proof that you are reliable and will make on-time payments, which is necessary for lenders, considering the higher risk on their end.
Substantial home equity
Apart from an adequate credit score, you must have built up enough equity in your home to qualify for a home refi in Fort Myers, FL. In simplest terms, home equity refers to the percentage of the home’s value you own, which you will get if you sell the house and pay off your mortgage. As a general rule of thumb, you should have 20% home equity or more.
Debt-to-Income (DTI) ratio
Your debt-to-income (DTI) ratio provides crucial information about how much debt you have compared to your income. To qualify for refi loans, lenders require you to have a stable financial safety net, represented by lower debt-to-income ratios. Conventionally, a DTI ratio of 43% or less is best to qualify for a mortgage refinance. However, some lenders may be flexible enough to accept your application if you have a lot of cash reserves.