Why Won't My Refinance Go Through?

The most likely -- and most frustrating -- reason could be because of the lender. Many people, when they decide to refinance, go to the lender that's servicing their existing mortgage. It may be the easiest refinancing option, but it can also take longer than refinancing with another lender. Because the lender already has your business, you're not a high priority. That will be especially true if you're refinancing to get a lower interest rate, which means the lender will lose money.

There are other possible reasons, though, that have nothing to do with which lender you choose:

Loan to value ratio is too high: If your property appraises significantly below the amount of the loan you're seeking, you may not be approved for a re-finance. This can happen if property values decrease in your area, or if your initial loan negatively amortizes.

Poor Payment History: If you've made late mortgage payments, some lenders won't re-finance your loan.

Change in Your Financial Situation: If your income has decreased, or if you've taken on additional credit card debt or some other kind of debt, it can affect your ability to re-finance. The change in your financial situation may cause lenders to view you as more of a risk than previously.

If you're considering re-financing, we recommend that you first get an accurate picture of your current finances and the status of your current mortgage. We also recommend that you don't automatically default to your current lender. Remember to shop around. You may find better rates or closing costs elsewhere.