The price of your home or size of your mortgage really doesn’t have much effect on your ability to qualify for a refinance, even in the current market. Unless you’re getting up into the jumbo loan range, which has its own rules, mortgage professionals say lenders still treat all price points pretty much the same, as long as the borrower meets other qualifications in terms of equity, credit scores and the like.

 

People at the lower end of the market are the ones right now that are having big problems with value. If deals are bein lost, it’s really because of value.

 

The decline in home values over the past few years has hurt homeowners at the lower end of the market the worst when it comes to refinancing a mortgage. Many of them tend to be first-time homebuyers who put up only minimal down payments and have not owned the homes long enough to put a significant dent in the mortgage, so when home prices collapsed, their equity was wiped out.

 

Homeowners in the mid- to upper levels of the conforming loan market, on the other hand, are more apt to be repeat homebuyers who’ve had time to build up equity as they moved up to nicer homes. They also tend to have better credit and more financial resources than first-time homeowners, which makes it easier for them to qualify as well.

 

 

Many of the lower-end borrowers also tended to be the people who took out the riskiest loans, as lenders reached far down the underwriting curve to qualify marginal borrowers for mortgages during the housing boom.

 

The easy credit also had an effect on prices and eventual price declines, so that homes toward the lower end of the market tended to depreciate more than those in the middle ranges, which held their value better.

 

Most of the refinances seen these days tend to be in a “sweet spot” from $400,000-$700,000 – high enough to avoid the severe depreciations of the lower end of the market, but below the cutoff for jumbo mortgages, which present their own set of challenges. 

 

Homes in towns or neighborhoods with lots of other homes of comparable size and amenities nearby are relatively easy to refinance because there tend to be plenty of comparable sales for determining an accurate value. 

It’s not necessarily high-end or low-end, it’s what’s selling around you and how common your house is.

 

Regardless of circumstances, each refinance these days has to be thoroughly and fully documented, with information on credit, income, appraised value and all the other factors used to underwrite the loan. It doesn’t matter if the refinance is at the low- or high end of the market.