Interest rates may be at their lowest levels in years, but qualifying for those primo rates is, unfortunately, also more difficult than it has been in years. According to many mortgage brokers, lending institutions are generally reluctant to provide the most favorable rates to all but the most bulletproof of borrowers– fallout from the subprime mortgage crisis. A potential borrow today must have an excellent credit score– most likely 720 or above– documented income, combined with minimal credit-card debt and a large down payment, or the  rates of 5 percent or less on a 30-year fixed-rate mortgage may be out of reach.

Not only are the qualifications tougher but there are other factors contributing to the overall difficulty in obtaining a refinance, or new home loan, successfully. Due to the decline in home values in many areas of the U.S., the banks are demanding tougher, more thorough appraisals.  Everything has to be explained in greater detail, and neighborhood home values, foreclosures and short sales are also factored into the overall equation.

For refinancing, the biggest issue is the decline in home values. Those homeowners who have less than 20% equity or who are trying to take cash out in a refinance are being told they need to buy mortgage insurance. People who were traditionally categorized as “A-credit” candidates: those with perfect payment histories, good credit scores, stable income and low credit-card debt– are being turned down because their equity isn’t enough to satisfy lenders.

The lending industry has returned to the tighter standards that prevailed before the housing bubble, a move that probably should have happened much sooner. If you are one of the lucky few who can qualify for a loan in the current lending environment, the rates are truly great, the best in a generation.

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