How to Refinance Your Home in Washington State
With how interest rates have been fluctuating these past few months, more people who purchased in the last year with a high-interest rate have refinancing on their minds.
Just a reminder, refinancing your home simply means that you’re replacing your mortgage loan with a different interest rate, preferably a lower interest rate, & a term for how long you have to pay it off.
Since refinancing is basically like applying for another home loan, your loan officer will need certain requirements from you in order to qualify
In order to qualify…
Your credit score must be 620 or higher (for a conventional loan). Now there are some loan programs that only require a credit score of at least 580 like an FHA or VA loan.
Your Debt-To-Income Ratio needs to be no more than 43%. Some mortgage lenders may allow a maximum of 50% Debt-To-Income Ratio in order to qualify.
A few other items that you’ll need that fall into that same criteria: W2s, 1099s, Tax Returns, and Paystubs from the past 2-3 months.
You need to have owned the title of the property for at least 6 months.
You may be required to have some positive equity in the property. Historically, the general sweet spot is to have around 20% positive equity.
One thing to know is that with positive equity, if a property has less than 20% positive equity into the property, your mortgage lender can still qualify you if you meet the other criteria.
Ultimately, the best resource for understanding if you’re eligible for refinance is to consult with your loan officer!
