SAN DIEGO (KGTV) — Nationwide, the average rejection rate for mortgage refinance applications has risen, according to the New York Federal Reserve.
For some homeowners in San Diego, it's been a rocky few years.
After record lows, interest rates skyrocketed and those jumping into the real estate market got hit with high rates and large payments.
Hoping things are now on the downturn, many may be looking to refinance, which means lowering interest rates and in turn, lowering mortgage payments.
However, whether they get approved is a different story.
The New York Federal Reserve said in 2023, about 15% of mortgage refinance applications nationwide were rejected. So far this year, a sharp increase at 25.6%.
Local mortgage brokers, like Joseph Sullivan, said it makes sense because of several reasons.
"Inflation is eating away at people's savings, so what ends up happening is they end up racking up debt," said Sullivan. "So they end up depleting their savings to racking up credit card debt and other kinds of debt, so that brings down what they can afford to what they qualify for."
Sullivan said people's debt to income ratio is also increasing.
That's how much you owe compared to how much you earn.
Some are buried in debt, make late payments, resulting in credit scores dropping.
"Make all of your payments on time because once you start getting late payments on various accounts - car or credit card - then your chances of being able to refinance will go down," said Sullivan. "I've seen a lot of people who've taken on a lot of debt."
Does Sullivan recommend refinancing?
"It depends on what your current situation is," said Sullivan. "We look at each situation and look at all the factors around it. How much debt they have, how much they're paying, what their credit score is."
Other tips on refinancing? Make sure you get three quotes. Work with an independent mortgage broker and compare your rates side by side.
