 TITLE: What to Do After You Were Denied a Refinance CONTENT: Why Lenders Reject Refinance Applications\n-----------------------------------------\nA lender may reject a home refinance application for a multitude of reasons. Chief among them:\n*   **Weak credit score and credit history**: Lenders don't like to see late payments and collection accounts on a credit report, since they may be indicators of financial irresponsibility. They may also hesitate to offer the loan if your credit scores are too low. The scores used by lenders typically fall somewhere on a range of 300 to 850, with a score of at least 620 being what many mortgage refinance lenders are looking for. If you are denied a mortgage refinance loan, you will receive what's called an adverse action letter from the lender informing you why your application was rejected. You have a legal right to request a free credit report from the credit bureau the lender used to review your credit.\n*   **Income issues**: If your lender believes your income is too low to handle the payments on a new loan, it may reject your application. Inconsistent employment also falls into this category: Lenders like to see that you've held a steady job for at least two years. Or you may have plenty of money to make the new payments, but can't provide evidence with paycheck stubs, W-2s, tax returns or bank statements.\n*   **High debt-to-income (DTI) ratio**: Your DTI is the total of your monthly debt payments divided by your gross monthly income. If your DTI ratio is greater than 50% (or sometimes 43% depending on the lender), many lenders will reject your application because it will appear that you're overextended.\n*   **Low home appraisal**: If the appraised value of your home is less than what you owe, you won't be able to refinance.\n*   **Insufficient equity**: In general, lenders expect you to have a minimum of 20% in home equity to refinance. And if you owe more money than the home is worth, you're what's known as \"underwater,\" which usually results in an automatic denial. END