Boston Real Estate for Sale

If you purchased a Boston condo for sale on the last few years and are thinking about refinancing, the process is similar to getting a new mortgage in many ways. Your Boston high rise condo will likely be appraised, your credit and income will be checked, and there will be a lot of paperwork to complete. The result may mean a significantly lower mortgage payment or access to the equity you have spent years building. However, don’t assume a refinance is a sure thing. Here are some tips to help you get your refinance approved, including mistakes you should avoid during the process.

Make Sure You Have Enough Equity In Your Boston Condo

Some Boston Beacon Hill condo owners are surprised to learn they aren’t eligible for refinancing with many lenders because they don’t have enough equity. Most lenders require a condo to have at least 20 percent equity before refinancing. If you put at least 20 percent down when you bought your condo and its value hasn’t decreased, you should be fine to refinance. If you put down less and your home hasn’t had time to appreciate in value significantly or your original loan isn’t very old, you may need to wait to refinance.

Don’t Take on New Debt

When you bought your Boston high rise condo, you were probably advised to avoid major purchases and changes to your debt and finances. This is also true with refinancing. Getting a car loan or making a big purchase with credit can easily derail a refinance. New debt or new credit cards may make you look like a bigger risk to lenders, temporarily damage your credit, and increase your debt-to-income ratio, an important metric lenders use to approve refinances.

Check Your Credit Score

Don’t make the mistake of going into a refinance application blind. Before you refinance, check your credit score, review your credit reports, and do what you can to boost your credit score. You can work on your credit by reporting errors on your credit reports, paying your bills on time, paying down debt, and ensuring you don’t use more than 20 percent of the credit limit on any card at once. The better your credit, the more likely you are to be approved for a refinance. Your credit score will also play a big role in the interest rate you get. If your credit isn’t in the best shape, refinancing might not even be worth it because you may not qualify for a lower rate.

Make Sure You Can Cover Closing Costs

While it’s possible to roll closing costs into your new loan, it’s usually best to pay the closing costs out of pocket unless you’re going to sell your Boston Beacon Hill condo in the next few years. By paying the closing costs when you close instead of rolling them into your new mortgage, you can avoid paying interest on the money for the life of your loan.

Your Condo Association May Be a Hurdle

Refinancing a Boston condo is a bit different than refinancing a loan on a house. To refinance, your unit and association must meet specific guidelines by Fannie Mae, Freddie Mac, and the FHA. FHA and conventional lenders typically require there to be a minimum number of owner-occupied units in the development and a maximum number of empty units. It’s also possible for your association to get denied by failing to meet lender standards regarding maintenance and care of the property. The association may be able to increase insurance coverage to mitigate this risk, but this is not always possible.

While you have some control over whether you can qualify for a refinance, you have very little control over whether the association qualifies. As a general rule, lenders want to see a condo development that’s financially healthy with an owner-occupied rate of at least 50 percent and a condo fee delinquency rate of no more than 15 percent.

If you’re interested in purchasing a Boston condo for sale, presently there are numerous properties on the market, and there’s always the option to refinance down the line if you’re unhappy with your initial interest rate. Reach out to us at Ford Realty (realtyford@yahoo.com) to start your search for the perfect property. Call 617-595-3712 today.


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