How Can I Negotiate A Refinance If I’ve Lost My Job?
With mortgage interests at historic lows, it is not a surprise that the housing market continues to stall. This is not the case with the mortgage industry as refinancing is stronger than ever. With everybody trying to refinance to a lower payment, there is a growing segment of the population having difficultly. These borrowers are asking the question, how can I negotiate a refinance if I have lost my job?
It is a great question and one that has not been fully addressed yet by the government. In the past two years, most of the aggressive lending programs have disappeared making it harder for many consumers to refinance. Additional things like credit issues and unemployment have made the problem worse.
It is not possible to refinance if you do not have a job (or regular income each month from another source such as Social Security). Furthermore, if the length of unemployment is protracted, it could affect your chances of getting a loan in the future. When applying for a mortgage, a lender will look at your credit, assets and equity in your home. Assuming all of this checks out, the next thing that is evaluated is your employment. Just being employed is not a reason for an approval. Your lender will evaluate many things including how long you are with your employer, spaces or gaps between jobs and if your current position is similar to the last one. Frequently, the best loan application might be turned down because the underwriter does not like the history of employment.
The best, and really only solution, for a person who has lost his job and looking to negotiate a lower mortgage rate, would be a loan modification. A loan modification can provide many of the same benefits that refinancing can. In addition, a loan modification is free. There are no upfront charges or closing costs involved, unless you decide to hire a professional service. With recent changes in the laws, many homeowners have simply elected to do it themselves. Since banks are very agreeable to loan modifications, it’s only a matter of falling within the banks qualifying parameters to get an approval.
The guidelines used for qualifying for a loan modification are completely different than that used for a refinance. Credit, income, equity in your home and employment are not scrutinized in the way they are for a refinance. (A do it yourself loan modification guide can provide additional help). This does not mean that it will always be possible to obtain a permanent loan modification while currently being unemployed. It does, however provide a good temporary solution while you were trying to get back on your feet and looking for a job. Many lending institutions will offer you a temporary forbearance. This is usually a reduction or complete elimination of your mortgage payments for a period of about three months. After that time, the lender will look at turning your forbearance into a modification, provided you have found a job.
So, if you are looking for way to negotiate a mortgage refinance if you’ve lost your job, a loan modification or forbearance will your best solution in the short term and eventually in the long run too.
J. Pisicchio is a professional mortgage consultant with over 20 years experience in lending and modification. As a formally trained credit analyst, he has helped many consumers reduce their mortgage payments through education. For more information about the Do It Yourself Loan Modification guide visit http://www.mortgageloanmodificationsecrets.com
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