Mortgage refinancing is beneficial for the following reasons:
- You can lower the interest rate, thus reducing the monthly payments amount
- You can shorten the loan term, hence cutting on the total interest cost
- You can create more certainty by switching to a fixed interest rate
- You can take out a loan and use it for other purposes, like home remodeling your home
Reasons why your mortgage refinancing could be denied
- Your mortgage is under water meaning, you owe more money than the cost of the house.
- Unstable or low income
- Weak credit score and history
- Failure to meet the lender’s criteria in terms of debt-to-income ratio
- Low home appraisal value
Mortgage refinancing options when your application is denied
Do not lose hope if your mortgage refinance has been denied. Find out the reasons for denial to try correcting the problem.
Alternatively, you can try out the following:
- Apply with a different lender since loan modification companies are not the same. If one turned you down, you might be in luck with the next one.
- If you first applied for refinancing with a new lender, consider going back and applying with your current lender; that is the one behind your current mortgage.
- Work on your credit score because lenders prefer low risk borrowers. Work on your debts and pay your bills on time.
- Try the Federal Housing Authority (FHA) for assistance in negative equity mortgages.
- You could also get a co-borrower if your income is insufficient or if your employment history is unstable.