Remortgages are becoming a rare commodity. Unlike in the middle of this decade when it seemed like banks would hand over huge checks to anyone who could walk and breathe at the same time, today’s market presents new obstacles to everyone and anyone interested in any type of refinance or mortgage loan.
Even though homes are selling and certain people are obviously being qualified for these new mortgages, there are tens of thousands of people with excellent credit who are being turned away for the same type loan with comparable income and FICO scores.
Today’s market demands almost perfect credit scores. If that’s not bad enough, they now demand that the borrower has plenty of financial liquidity in the event of a catastrophic event. They no longer hand over checks just because you have a great job and pristine credit. You need to prove you have money to rely on if you lose your job or your portfolio tanks.
Banks not only suffered near annihilation in the latest financial crisis, they have almost made a conscious effort to stay down. They are refusing loans and thereby reducing their risk levels. Even banks who received billions in bailout money are keeping it under tight wraps and not sharing it with their community – thereby continuing the cycle of economic upheaval.
Consumers with decent credit scores over 640 used to be assured that if they had income, they could be homeowners. And they could refinance and get lines of credit with nothing more than another credit check.
Today, it’s a different story. Banks want to make sure you can afford paying your loan going forward if anything happens. Will a stock market crash wipe you out? Will your employer let you go? If so, will you have money to count on – and continue to pay for your mortgage? If you can’t convince a bank this is so, you won’t be getting that loan any time soon.