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Due to the poor lending practices of the recent past and the subsequent mortgage crisis, the mortgage landscape has changed significantly. Homeowners are now left with a new - but still viable - refinance market.

Borrowers hoping the market will return to normal need a reality check. The recent subprime crisis and declining home values are pretty good indicators that the recent market has been anything but normal.

Over the past few years, home values were over-inflated, lenders were overly generous, and borrowers were borrowing more than they could afford to repay. The results - a epidemic of defaults and declining home values.

This phenomenon, commonly referred to as a "market correction," doesn't mean that the mortgage refinance world is a thing of the past . . . far from it! Homeowners can still get a refinance on their home loans, but qualifying today will dictate they play by a new set of rules. . . or should we say, the old ones!

No Equity – No Refi

Lenders have tightened the screws when it comes to borrowers with bad credit. Equity is now the name of the game; without it, a lender is far less likely to touch a borrower with a shaky credit history. Borrowers looking to refinance may even find themselves having to come up with some sort of down payment.

Subprime borrowers waiting

There's a great deal of speculation out there about the future of subprime lending. The subprime market remains a risky, but very profitable product for lenders. Most lenders feel that these loans will resurface again when home values start increasing. But in the meantime, if you're a subprime borrower, you're going to have to sit tight until that day arrives.

Does your lender qualify?

In today financial environment, you need to scrutinize a lender just as closely as they scrutinize you. With so many lenders going under because of the housing market crisis, you’ll need to make sure that your lender will be around for the long haul. Do your research and be certain that you're going with an established financial lending institution that has deep pockets and can ride out this market slump.

Fixed-rate advantage

If this mortgage crisis has taught us anything, it's that a fixed-rate loan is worth its weight in gold - especially because rates are currently at such historic lows. With market values unstable, choosing a fixed-rate loan that guarantees that your rate won't skyrocket when it adjusts will provide you peace of mind.

These tips probably seem like they are a departure from how people have approached mortgages during the last few years; but they're a return to the more prudent ways of the past. Considering the recent state of the market, this advice promises to be a permanent part of the mortgage world's future.

These days, life seems to come down to monthly payments. If you are stretching to meet the monthly payments on your current mortgage, and would like to consider your refinance options please fill out the form below and we will have our professional mortgage advisor contact you.

Did you know . . . The old rule of thumb for when to consider a refi was when rates dropped at least 2%, but this is no longer the case. Many different individual factors need to be analyzed to determine if refinancing is the smart financial move for you. We are always happy to provide a recommendation to you for your particular circumstances.

Tri County Residential Group
7828 N. Haven Ave • Rancho Cucamonga, CA 91730
Office: (909) 476-9600 •

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