When you’re trying to refinance your home, the lender may ask you to prove that you have a lower down payment, have a larger credit limit, or that you’ve had a lower income.
That’s because lenders don’t want to put a huge amount of effort into helping you pay off your home loan, according to a report by mortgage experts at Credit Suisse.
It’s one reason why many Americans who take out a home loan don’t get a good deal.
“The bottom line is, a good refinance is not a guarantee of a good or fair deal,” said Greg McBride, senior analyst at CreditSuffolk.
“It’s an estimate of the borrower’s risk, which can be biased in favor of those with higher down payments, larger credit limits, and higher incomes.”
A lot of the problems with mortgages can be traced back to this problem of measuring risk.
According to a 2015 study, Americans who have mortgages with a higher down payment are three times more likely to be in default than those who have smaller mortgages.
The mortgage market has been struggling for years, with borrowers in some parts of the country going underwater on their loans.
The federal government, in response, has taken steps to curb defaults.
This month, the government lowered the limit on home refinancing, meaning that you can refinance up to $750,000, but only if your down payment is at least 20 percent of the median income for that region.
It also reduced the credit limit on new construction loans to 3.75 percent of your adjusted gross income (AGI) and cut the maximum interest rate from 6 percent to 3 percent.
That means you won’t get the 5 percent down payment that you’d get with a mortgage, but it will mean you won.
“I’m not trying to paint a rosy picture, but if you’re a person with an income above $150,000 you don’t have to worry about this,” McBride said.
In addition to this effort to curb the problem, the federal government has also lowered interest rates on mortgage-related debt, reducing the amount you have to pay each year.
So, while the number of Americans who can get a refinance may be higher than it was 10 years ago, the numbers are still relatively low.
A lot can happen between now and then, including when the lender asks you to provide documentation to prove your income, McBride added.
And even if you don