A reader asks, “We currently have a FHA loan on our house and our mortgage company says we can not do a refi with a adjustable rate even know we will not be in our house 5 yrs or more. and now we have a 4.75 fixed rate for 30 yrs so what is our best option to get a lower rate cause we will be taking our retirement and social security in the next 2 months and will be in a hardship crisis.”
This is a difficult reader question to answer. There are many reasons why a borrower could be turned down for a refinance loan, and some of those reasons can depend on the type of refinancing being applied for–cash out refinancing, for example, may be difficult for some borrowers on or approaching a fixed income if their debt-to-income ratio is too high.
We can’t speculate whether that’s the case in this instance, but one thing is certain–a borrower turned down for refinancing can always approach another lender.
You don’t have to use the same lender as your original mortgage loan when it comes time to refinance. You are free to shop around for a new lender to do the refinance loan. In this case that may be the best advice–look for a lender who may be willing to work with you in your current circumstances.
Borrowers should never feel they MUST use the original lender.
In cases where a borrower is turned down for financial reasons, it may help to get financial counseling from an FHA/HUD approved agency. You can call 1-800 CALL FHA to get a referral to a housing counselor near you. Housing counseling can assist on topics such as lowering your debt-to-income ratio, preparing for the new loan application, and other important areas.
Do you have questions about FHA home loans? Ask us in the comments section.