Refinance current mortgage?

Hi I have a mortgate of around 2 years old and is a 30 year fixed rate at 6.5%. With interest rates being slashed right now and house prices dwindling it would make a lot of sense to be able to refinance the mortgage at a much reduced rate, lower the monthly premium but still pay (ie overpay) the same amount each month to the mortgage company thereby paying of the principle faster and possibly ending up in a few years time with some equity back in the home. If I leave it as is the market is going down as fast as I’m paying off the principle and am therefore no close to actually owning my home. The other alternative to over paying is refinancing at a 15 year fixed rate loan as that seems to be giving me around the same monthly payment as I’m paying out now.
But the question is, with no equity in the house will my current (or even another) mortgage lender even look twice at refinancing (I understand that lenders are reluctant to give out loan to value ratios of higher than 70-80%)

I have a duplex. I rent one side and live in the other. I tried refinancing a month ago to take advantage of the low rates and got the “we can’t help you because your appraisal came in at 43% lower” than the value I gave them for the application. The appraisal came in at $ 207,000 and I gave them $ 360,000 (because it was appraised for that much 2 years ago). The appraisal was severely affected by other “like” homes in town that have foreclosed.

Now, we’re not in financial trouble – we pay our mortgage every month and have very little debt. Here are the facts:

Our combined income is about 140K annually.
Current mortgage: $ 2150 (rent covers $ 1100 of this amount)
Current balance on loan $ 271,000

Loan rejected!!! Okay… fine.

This really made me angry/sad/depressed. I thought this would put a damper on to our plans as I had originally intended to refinance from a 30 year to a 15 year in an effort to build equity faster. We also had planned on putting our side of the duplex for rent and purchasing another home (in a better neighborhood) to live and raise our kids in. The plan was to keep this duplex and rent it out for the length of the mortgage and hopefully sell it at the end of the 15 year loan and put the profit towards our children’s college education.

My question is: How am I affected by this loan rejection? If I wanted to purchase another home for ourselves – Will the lenders look at my current property’s loan/value ratio and say no to a new mortgage? I asked the lender that rejected our loan the same question and he said that the two property will have nothing to do with each other and that it would not affect us at all. I find it hard to beleive since they rejected my refinance attempt because of my current loan/value ratio. Why wouldn’t they look at my current property’s ratio when determining whether to give me another loan?

Given my situation…Would I have any trouble obtaining a loan for the purchase of a new home while maintaining my current?

Thanks in advance for your expert advice!

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