What If I Dont Qualify for a Cash Out Refinance?
Housing prices have been in a decline for the last four years. It has become more difficult for your house to appriase high enough to qualify for a loan. Also, because the economy has been sluggish, many borrowers have been struggling to make payments, damaging their credit scores. Before 2007, banks were handing out second mortgages and home equity loans freely---but not now.
Don't Give Up!
If you are rejected for a cash-out refinance, always shop around for other lenders. Local realtors, neighbors, or friends can sometimes refer you to a lender with available options. A different lender may have better connections on placing your loan with a mortgage investor, or they may know of ther plans offered by Fannie Mae, Freddie Mac, or Ginnie Mae (the government -sponsored agencies that currently control the mortgage market). You may also be able to dispute the appraisal of your house and qualify for a larger mortgage.What Are My Other Choices?
Cash Advance, or "PayDay Loans"
There are still a few options available for homeowners who are "underwater" (owe more on their homes than it appraises) but still need cash now. One alternative is getting a cash advance loan, a small loan based on your paycheck amount and due within two weeks or less. The interest rate on these loans are very high (on an annualized amount) but can be a life-saver if you need immediate funds to keep your electricity, water, or other necessities turned on. Often the fees to turn back on your water or electric is much higher than the interest on the cash advance loan. The fees for these loans are also much lower than an overdraft check charge can be, so it is an option worth considering. But remember! These are very short-term loans and should be paid back immediately and not rolled into future loans (taking out a new loan to pay off an old one). These loans should be looked at emergency borrowing and not part of personal long-term financing.An Unsecured Personal Loan
There are still lenders out there willing to give personal loans to borrowers with better credit scores and a history of long-term employment. These loans have rates higher than a home mortgage and are not tax-deductible, but still offer funds when you really need them. One Main Financial (a part of Citigroup) offers a wide range of personal secured and unsecured loans. But your best bet may be a local credit union. They are usually much smaller than a regular bank and can better determine your own personal needs and ability to pay off the loan. Also, more and more credit unions are offering cash advance loans to their members at much lower rates offered by store-front payday lenders.Menu
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