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Why was your mortgage refinance request denied?

We can't always predict our future. This also means that we cannot know our financial future, even if we took the time to do careful financial planning. Difficult times and financial hardships could occur, making it challenging to keep up with bills, especially large ones like a mortgage. When these unfortunate events do occur, residents in South Carolina and elsewhere seek out their options, such as refinancing their mortgage.

Individuals and families seek to refinance their mortgages as a means to lower their payments, lock in a fixed rate, shorten or lengthen their terms for paying the loan back or as a way to cash out equity. While it is a beneficial step for lenders to take, not everyone qualifies for refinancing.

Why was your mortgage refinance request denied? The first reason a refinance request could be denied is because of the appraisal of your home. This means that the current market value of your home does not justify the amount you are requesting to borrow. If an appraisal is too low, that means that it is not currently worth enough for the lender to approve the amount requested.

Another reason a mortgage refinance request is denied is because of credit. Credit scores are reviewed when financial requests are made with a lender. And if a person's credit score does not reflect a good credit or payment history, then this could result in a denial. Finally, a borrower could be denied refinancing due to their debt-to0income ratio. Lenders are concerned about how much you earn and how much you owe. If you owe much more than you earn, then this could result in a denial to refinance a mortgage.

Being denied for a mortgage refinancing can be difficult to deal with; however, borrowers should understand that it is not the end of the line for them. There are options and steps one can take to obtain a favorable decision. Thus, it is important to become fully aware of your legal rights and what actions you can take to protect them.

Source: Lendingtree.com, "3 Top Reasons Your Mortgage Refinance Was Denied," Marcie Geffner, April 4, 2016

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