Five Reasons Your Mortgage Refinance May Get Rejected10/27/2010 Mortgage rates are still low and the market is right to refinance, but you may meet with rejection if you make some of the following mistakes. These are the top five reasons why mortgage refinance applications are turned down. 1. You ask the wrong lender. Different lenders have different stipulations and can offer you different terms. It may be that the first lender you contact actually isn't interested in refinancing your home. Don't give up. Shop around and compare what various lenders have to offer. Compare mortgage rates, compare loan terms, and compare LTV requirements. Find the mortgage solution that best meets your needs. 2. Your home doesn't appraise high enough. You'll probably need to have at least 20% equity in your home before a lender will agree to refinance your loan. If your home value appraises at a lower number than you expected and you don't have at least 20% equity, you may find yourself stuck. Wait to refinance until you've put enough money into your home to earn a new loan, and check the value of your home before you start. 3. You don't have the right paperwork. Believe it or not, some homeowners are unable to provide the proper documentation to secure a new loan. Take the time to find all the needed information before you apply for a refinance. You'll need to provide your present mortgage information, proof of income, tax documents, employment documents, and personal information. 4. You can't get the right rates. Interest rates are low right now, but if you can't take advantage of the lowest ones, you may discover midway through your application that it isn't worth it to refinance. You won't be saving any money. Lock in a rate before you proceed too far, or you may find yourself losing money rather than saving it. 5. You can't pay the closing costs. Just as with any other loan, a refinance loan requires you to pay closing costs. Many homeowners forget this. If you don't have the money to pay for the closing costs, you won't be able to complete the loan process. Find out what the closing costs will be long before you get to the closing table. If you have an FHA mortgage or a VA home loan, you may be able to refinance with few or no closing costs require. Check this with your lender before you apply. |
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