Refinancing your mortgage is usually easier than getting a new mortgage, assuming you’re able to refi in the first place. However, refinancing can still be difficult if you don’t handle common problems in the correct way. Here are five refinance obstacles to watch out for and their solutions:

You Have Diminished Equity

Many Americans can’t refinance as a result of not having enough equity. When this is the case, a refinance is no longer possible. If you’re seeking a refinance, you will find that many lenders will deny the loan if your home’s present value can’t secure enough funding to cover the new balance.

Solution: There is no easy solution for this problem, but the best way to remedy this is to keep making mortgage payments on your current mortgage until you have regained your value. If you’re underwater, you may be able to perform a refinance through HARP, depending on your loan program.

You Recently Refinanced

If you have recently refinanced within the last six months or year, you might not be able to refinance anytime soon.

Solution: There isn’t a simple way to get around this problem, but you can always speak to your lender to see if he or she is open to refinancing your loan again. If not, you can speak to other lenders to see if it’s an option.

You Don’t Occupy the Property Anymore

If you’re trying to refinance a home in which you no longer live, you will need a larger amount of savings and home equity. Investment properties are very risky, so you will need to comply with the necessary regulations associated with refinancing.

Solution: If you are planning on leaving your home, refinance it before you leave. If you have already moved out, you don’t have many financing options.

You Haven’t Kept Up-to-Date on Your Current Mortgage

If you want to refinance your home loan, you must prove to your lender that you are reliable. Therefore, if you haven’t made consistent payments on your current mortgage, you will be seen as a bigger risk.

Solution: Don’t apply for a refinance loan until you have a better loan payment history. This will increase your chances of being approved, and you might be able to qualify for lower rates. Another option that may help some borrowers who are behind is the Home Affordable Modification Program, or HAMP.

Your Credit Score Has Fallen

If your credit score has decreased, you will represent more of a risk to your lender. Lenders frequently deny refinance loan applications if a borrower has a low credit score.

Solution: Bad credit borrowers must wait and establish good credit once again before applying for a home refinance loan. Make sure you review your credit history to eliminate any errors that could be affecting your credit score.

If you own a home or are planning on owning a home in the near future, there’s a chance that you might want to perform some home renovations. Or you could be planning on purchasing a “fixer-upper.” Luckily, there are specific loans for these exact purposes called renovation loans. The two most popular renovation loans are FHA 203k Rehab Loans and Fannie Mae HomeStyle Loans. While similar, the two loans have several main differences:

FHA 203k Rehab Loans

FHA 203k Rehab Loans have an easier underwriting process and are made up of two variations: streamlined and full. Streamlined FHA 203k Rehab Loans are generally used for cosmetic repairs that are neither complicated nor expensive.Full FHA 203k Rehab Loans are usually used for more complicated repairs that require adding or changing anything major in the house. They require buyers to speak with a HUD FHA 203k consultant in order to evaluate budget and understand the renovation loan process in detail. This loan falls under the FHA umbrella, so you will have to make sure the home you are purchasing or refinancing is an FHA property. The minimum credit score for this type of loan is often 640, and the minimum down payment is 3.5%. They require mortgage insurance in case of borrower default, and insurance payments last for the life of the loan.

Fannie Mae HomeStyle Loans

Fannie Mae HomeStyle Loans have a much more complicated underwriting process as they fall under the conventional loan umbrella. Fannie Mae HomeStyle Loans can be used with any property you are purchasing or refinancing, so the loan qualifications are much more stringent. The minimum credit score requirement for this type of loan is often 680, and the minimum down payment for this type of loan is 5%. With this type of loan, you will be able to do extensive repairs and modifications such as building a pool, or changing the square footage of the house. As with other conforming conventional loans, private mortgage insurance (PMI) is required for HomeStyle loans with less than 20% down. However, PMI is cancelled after the borrower reaches 78% loan-to-value (LTV) on the house.

If you want to do repairs or modify a home you are purchasing or refinancing, a renovation loan is one of the simplest routes. You will need to meet with your lender to determine what loan you will qualify for and be eligible for with your property.

Selling a home is always challenging, but the process becomes even more challenging when it’s a down housing market.  No matter what the state of the housing market is, you can always improve your home’s appeal in order to help it sell quicker.  Here are our top 7 tips regarding how to sell your home in a down market:

Get Your Home Inspected.

Your potential buyers will want to know your home has been well maintained throughout your stay.  If you hire a home inspector, you will be able to find and fix any major maintenance problems before potential home buyers buy the house.  While your buyers will likely perform their own home inspection on your home, it will help the process move quicker if you can show that you already had your home inspected.

Get a Home Appraisal.

You can pay approximately $300 to have a professional appraiser evaluate your home.  The appraiser will make an estimate regarding what your home is worth based on similar recent home sales in your area.  Your home appraisal report will also give you information with what a home buyer would pay in order to purchase your home with a loan.  When you have this information, you can tailor your home marketing better.

Promote Your Home Warranty.

If your home is backed by a home warranty, it will sell much quicker than if it isn’t.  This will just be one more reason why home buyers will feel more secure buying your home over another home.  Home warranty plans usually cost $300 and cover larger appliances such as refrigerators and dryers.

Give Cash for Home Improvements.

It’s likely your home buyer will want to perform improvements on the home.  These improvements could be anything from adding a playground in the backyard to replacing the paint colors in the family room. If you want your home to stand out, you can offer cash as an incentive to perform these improvements.  You might be able to sell your home quicker if you do this, and you can recover the cash amount with your asking price.

Pay for the Buyer’s Maintenance.

When your new buyers are moving in to the home, they are going to have a million things to do and worry about.  If you offer to pay for their maintenance services such as hiring a lawn care company or a pool cleaner, you will be providing a huge service.  This could potentially persuade the borrower to buy your home over another person’s home.

Be Flexible with the Asking Price.

If you’re like most home sellers, you have a minimum price in mind and you don’t want to go below your home’s value.  This isn’t a smart tactic, because the few thousand dollars you want to keep might actually be preventing your home from selling.  If you receive a lower offer than you anticipated, still consider it in conjunction with the cost of keeping your home on the market.

Visit a Real Estate Auction.

As a seller, you should consider using a real estate auction as a method for selling your home.  There are several risks associated with using a real estate auction, but you have the potential of selling your home quickly with an added profit.  Auctions usually work very well when there are many home buyers with a small real estate inventory that is available.

It’s no secret that mortgage rates are constantly fluctuating.  This can be tricky for home buyers who are waiting to buy until they can secure the lowest possible rates. You may be watching the numbers go up and down by a few hundredths of a percentage point here and there, but this does little good for borrowers and instead usually invites headache and indecision. The best way to move ahead with the buying process is to simply lock in a rate – just go for it!

The easiest way to enhance your rate-lock confidence is to focus on the date on which you will be closing.  If you’re closing in 30 days, you will want to lock in your rate for 45 days.  The longer your rate is locked, the more expensive the loan will end up being due to lender risk.  Many lenders won’t lock your rate for less than thirty days unless you’re immediately ready to close.  Some lenders will extend the rate for you if you can’t close by the end of the lock, but you will need to double check to see if your lender abides by that policy.

If you’re still concerned about receiving a good rate, you can estimate where the rates are heading by checking the 10-year bond prices.  It’s very common that increased 10-year bond prices are often correlated to decreased interest rates.  You can also look into buying discount points (one percent of the loan amount is equal to one point) to buy your rate down. Buying discount points can be unhelpful if you don’t plan to own your home for several years, so contact us if you want to know if it could help you or just take money from your pocket in the long run.

Your debt-to-income ratio or  DTI is the resulting percentage of dividing your monthly liabilities by your monthly income. Lenders use this number to qualify you for a specific mortgage loan amount. Most mortgages now have a maximum back-end DTI ratio of 43% as a result of the new Qualified Mortgage rule. A back-end DTI percentage encompasses all your monthly liabilities versus your income, and a front-end DTI percentage represents your monthly housing payment versus your income. Lenders weigh your back-end DTI ratio more importantly than your front-end DTI ratio, but both numbers are very important.

Your DTI ratio maximum will also depend on the type of loan you take out. FHA loans are dependent on whether or not your loan is automatically or manually underwritten. Manually written loans have a maximum DTI ratio of 31/43. If your purchase qualifies as an FHA Energy Efficient Home, you have a maximum DTI ratio of 33/45.

VA loans have the same automatic and manual qualifications as do FHA loans. If your VA loan is manually underwritten, your back-end DTI ratio is 41%. VA loans do not have any front-end DTI requirements. You can sometimes exceed this number if you have other factors such as a residual income that is 120% of your area’s limit. USDA loans have a maximum debt-to-income ratio of 29/41. These rates can be exceeded if your loan is approved under the Guaranteed Underwriting System.

If you’re curious about your debt-to-income ratio, divide your gross annual income by twelve. Then, divide that number by all of your monthly responsibilities, and that’s your number. This number is a great way to estimate how much house you can afford. Your lender will also work with you to make sure you purchase a house within your comfort zone so as to reduce your chances of defaulting.