Refinancing a mortgage can be a routine process, or it can be a difficult experience if you are denied a loan. If you know in advance why home loan applications are denied, you can prepare yourself in advance so that you will be better able to qualify. Here's why people are often denied a loan.

The number one reason is poor credit history. Poor credit history results from a failure to pay your debts, paying them late, or having too many debts. Did you know you can get free credit counselling from the Federal Government, and it is truly free. Just go to the US Department of Housing and Urban Development to find a credit counsellor close to you.

Another reason people are declined a loan is because they have insufficient income relative to the cost of the house they wish to finance. The solution here is to know what you can afford. Go here to learn how much house you can afford on your income before you make a loan application.

A third reason the mortgage refinancing can be declined is because you have too much debt. This is a problem you can almost always do something about. Pay down credit card debt, pay down other loans you might have, and get your debt down to a qualifying level before you make your loan application. The rule of thumb is this. Your home loan payment plus other recurring expenses must not be more than 36% of your gross income. So pay down your debt to get yourself to where your house payment and recurring expenses are less than 36% of your gross income.