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Refinance Purchase Home Equity

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Fixed ARM Interest Only FHA

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Why Can’t I Refinance To Lower My Interest Rate?

By Bob Redtree

Why can’t I refinance into a lower my interest rate? Read here to find out what you need to refinance and save thousands of dollars in interest!!

With interest rates at historic lows many homeowners are looking to capitalize on the low rates and refinance their mortgage. Unfortunately, many homeowners are being denied during the refinancing process and are unable to take advantage of the low rates. Find out here why many people can’t refinance into a lower rate.

Not Enough Equity in Their Home

The most common reason why people can’t refinance into a lower interest rate is because they don’t have enough equity in their home. Previously, a homeowner didn’t need any equity in their home, but due to tighter lending restrictions, most lenders now require 10% equity. Due to drastically decreasing housing prices, many people have all of the equity in their homes and traditional lenders would not be willing to lend to them.

Poor Credit Score

Another common reason why people can’t refinance into a lower interest rate is because their credit score is not strong enough. A few years ago, many people were able to obtain mortgages with either no credit check or with credit scores above 620. Today, lenders require much higher credit scores to refinance mortgages. Therefore many people who previously were acceptable risks to lenders are no longer acceptable due to low credit scores.

Not Enough Income

The third most common reason why people can’t refinance into a lower interest rate is because they do not make enough money. Previously, lenders were willing to approve mortgages to anyone whose debt to income ratio was under 38%. Today, lenders require a debt to income percentage of under 33%. Coupled with the fact that many people have lost their jobs or accepted pay cuts, fewer people earn enough money to keep their debt to income percentage below 33%.

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3. Can I Refinance To Lower My Interest Rate?
4. Higher Credit Scores Mean Lower Mortgage Rates
5. How Do I Refinance And Lower My Mortgage Interest Rate?