Even with record low mortgage interest rates, a lot of homeowners are having a hard time refinancing due to being underwater with their home loan or because of self employment. Even with a good credit score and mortgage repayment history, many people are not able to take advantage of the low interest rates and get approved for refinancing. Here are some reasons why homeowners are being denied refinancing options.

Many homeowners are being denied a mortgage refinancing option due to many different factors. However, some things are a constant and pretty much the same for everyone:

-The housing market has been hurt by foreclosures, loan defaults, and short sales. This has led to home values dropping which leaves homeowners holding the bag on a mortgage that is worth more than their home is in the open market.

-As a result of the housing meltdown, many mortgage lenders and banks have much harder to qualify for mortgage refinancing requirements and have much stricter loan underwriting requirements.

-Many homeowners who are self employed are having issues with new income rules and being able to verify a steady income.

While many mortgage lenders and banks are reporting up to a 50% increase in mortgage refinancing applications, but an estimated 1 out of every 3 homeowners who apply for refinancing are not going to be able to get it. In the past, an average of 1 in 5 homeowners would not be able to get low interest rates, a lot more people than are able to get them now.

Homeowners are having problems, even if they have an amazing credit history, and have never missed a mortgage payment. Since so many income verifications are now needed to get refinancing, many self employed people have a hard time when they are required to state their income. That is due to having no signs of income on tax returns, many of which are in businesses names. Also, many homeowners are being hit with the reality that their home has dropped a lot in value. When an appraisal happened before refinancing, people are often shocked to find out that their home has dropped in value. Many times, the neighborhood makes homes drop in price. If foreclosures and short sales are taking place around your home, you can be sure that they are driving down the values around them.

While mortgage refinancings are actually happening for many people, a lot of homeowners still need help. Somewhere around 20% of all homes are underwater when it comes to the mortgage, and they are going to have a hard time getting a truly beneficial mortgage refinancing deal.

The best thing homeowners can do is be vigilant, on top of their paperwork, and keep researching potential mortgage lenders, banks, and mortgage refinancing options.

-M Petrone

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