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What do lenders look for when approving real estate refinances?

As property values begin to rise in the Charleston area, many homeowners may be experiencing noticeable increases in their home's equity for the first time in years. A person's equity, the difference between market value and the outstanding balance on a mortgage, can provide significant financial leverage, especially in terms of real estate refinancing.

Right now, interest rates remain quite low and the residential real estate market is beginning to gain some steam. This may be motivating many South Carolina residents to check into the possibility of refinancing their home mortgage in an effort to reduce monthly payments.

Rising property values may be giving homeowners the kind of equity they need to receive approval from his or her lender to refinance. Generally speaking, lenders want homeowners to have at least 10 percent equity in order to be considered for refinancing. Knowing how beneficial refinancing can be in the long term, it's important to make sure a person gets an accurate assessment of their property. Accounting for local real estate values and dynamics is an important aspect of ensuring accurate property valuation.

Refinancing can provide a great financial opportunity for homeowners looking to save money over time and take advantage of current lending conditions. However, homeowners may run into resistance from lenders or excessive transaction fees. This is why it's important to do some groundwork before moving forward with refinancing.

The bottom line is that lenders will probably look to agree to refinance on terms that are beneficial to them and cost you more. Despite this reality, having someone on your side who is familiar with this real estate transaction can help to make sure the terms are fair and will truly benefit you down the road.

Source: Charleston Post and Courier, "If at first you don't succeed, try and refi again," David Slade, Jan. 27, 2013

  • Our firm has helped South Carolina residents move forward with residential and commercial real estate transactions. To find out more, please visit our Charles real estate refinance page.

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