Homeowners who are denied a refinancing are often left feeling bad about the experience. Well, the first thing you need to do is not take this personally, and figure out why you were denied to being with. Here is some information to help you after getting rejected for a home loan refinancing.

Being able to know why your application has been denied is the first step in solving the problem. Figure out from your mortgage lender or bank why exactly your application for refinancing was not approved. Here are some of the most popular reasons homeowners are denied a mortgage refinancing opportunity.

A Bad LTV (Loan to Value) Ratio
Unless your loan to value ratio is within the mortgage lenders policies, you will not get approved. If this is the reason for your rejection, it means you are trying to borrow too much money compared to the homes actual market value. Getting approved with a bad loan to value ratio may mean you need more of a cash down payment, or borrow less money.

Not enough of a Down Payment
Typically, mortgage lenders will require you to have at least 20% cash for a down payment, or a 20% equity stake in your home. If this is why you were denied a refinancing, you need to get more down payment money to get the approval. A choice you may have is to look for a mortgage lender who allows 100% financing, or will work with you and your small downpayment.

Your Income is too Low
If your monthly mortgage payment exceeds 28% of your gross monthly income, odds are your application will be denied. If the amount of your total debts exceeds 36% of your income, your application will also be denied. In order toget approved, you need to reduce your other debts as much as you can and then re apply for refinancing.

Bad Credit Rating
If you have been denied refinancing because your credit score is too low, there are some things which you can do to make it better. A number of different things affect your credit score. Things like history of repayments, not late payments, will play a big role in your approval. Reducing your debts, will raise your rating, as will paying down other bills and closing all accounts you can.

Also, make sure to check for inaccuracies for in your credit report. You can get free copies from each of the major 3 lenders. If you find any errors, make sure to report them and get them taken care of.

-M Petrone

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