Refinance Options When Youre Unemployed
Here are some mortgage refinancing options to look for as you shop around for a lender to work with you if youre currently unemployed.
- Guarantor-secured refinance. If you know someone who will sign onto the refinance loan as a guarantor, that may be enough security for a bank to take a chance on you. But if you default, your guarantor is on the hook to pay your debt for you.
- Low-income loan programs. Some lenders offer refinance loans with special rates for low-income borrowers. Often these programs require you to pass an online financial literacy class, and some require that your home is located in a specific area.
- FHA streamline refinance. This option is only for borrowers who are current on their existing FHA mortgages. It doesnt allow you to cash out on your equity, but the loan requires very little documentation and doesnt require income verification.
- VA streamline refinance. This loan is more often called an interest rate reduction refinance loan . Like the FHA streamline, you need to be current on your existing VA mortgage, but it requires less documentation and has lower closing costs.
- USDA guaranteed loans. If you live on a family farm or ranch, the USDAs Farm Service Agency works with certain lenders and will guarantee up to 95% of your loan, which can help you secure a refinance.
What Mortgage Loan Types Can I Apply For
Theres no real difference in eligibility between what someone qualifying based on seasonal income can apply for and the options for anyone with a year-round income stream. You just have to be able to qualify.
The basics are the same. A lender is going to look at your credit history, debts and monthly income in evaluating your loan application. But seasonal employment as a source of income also comes with its quirks.
Before we get into what qualifying looks like, we should go over the different loan programs available to you. To start looking at scenarios, check out our mortgage calculator.
Among many other options, you can get a 30-year fixed mortgage. If youre looking to pay it off faster, you might think about going from a 30- to a 15-year term.
How To Refinance Mortgages For Retirees
Refinancing after you’re retired can be difficult.
Refinancing your mortgage when rates drop saves money on your monthly mortgage payment. If youre a retiree, you may want to take advantage of lower mortgage rates by refinancing your house. But if your income in retirement comes from Social Security, a pension, retirement investments and even a part-time job, your monthly income may not add up to enough to satisfy mortgage lenders, even if you have hundreds of thousands of dollars in the bank. If you want to refinance your home after retirement, be prepared to wade through some additional paperwork and shop carefully for a lender.
Read Also: Va Individual Unemployability Benefits
If I Refinance Can I Have A Co
You know how retail stores often offer deals to people who take out a new credit card deals that loyal customers who already have the card do not get? Well, the same thing happens if you bought a home when interest rates were high, and then they drop. New buyers could actually be getting a better deal than you got. With a mortgage, you have a chance at getting the deal, though, which you typically dont at the retail store. You can refinance your mortgage to get the low interest rate if you qualify. The problem is if you dont have an income you probably wont qualify. Dont give up, however, because you just might be able to refinance even without income.
Request A Loan Forbearance
If youre struggling to make your loan payments, a mortgage forbearance might be a better option than refinancing. A mortgage forbearance is an agreement to temporarily pause your loan payments. Before agreeing to a forbearance, make sure you understand how repayment works. Will your monthly payments increase after forbearance or will your loan term lengthen?
Also Check: Va Disability Unemployable
Can You Refinance While On Unemployment
In most cases, you cannot refinance your house if you are unemployed.
For tax purposes, unemployment income is counted as wages. But it cannot be used for refinancing except in the narrow case of seasonal workers.
Seasonal workers as the name implies work only during certain times of the year. For example fishermen who fish during a particular season, ski operators. Even Santa Claus can be considered a seasonal worker
A seasonal worker, can document that they received jobless payments consistently for at least two years and be considered for a mortgage. And the lender must verify that the seasonal income is likely to continue. Refer to the specific guidelines for Federally backed loans by Fannie Mae and Freddie Mac.
ACTION STEPS: If you are a seasonal worker, get the previous 2 years tax returns from the IRS. Make sure it documents the seasonal payments received.
Prepare To Prove Income To Get A Home Loan
Anyone with alternative types of monthly income should be prepared to supply more documentation than the standard salaried borrower. Ask your loan professional upfront what documentation you should start gathering.
When preparing your loan application, you can expect to supply items such as letters and verifications from past and current employers, W2s and tax returns for at least two years, and financial paperwork from relatives if using their income to qualify.
Of course, youll still need a good credit score, a down payment but unusual income streams wont prevent you from being able to take out a mortgage.
Tim Lucas
Editor
Recommended Reading: How Do I Transfer Unemployment To Bank Account
The Bottom Line: It’s All About Your Finances
Managing loans on a fixed income as a senior citizen can be challenging but it isnt impossible. Make sure you include all of your income when you apply. You can also improve your chances of a refinance by sticking with your current lender and maximizing your appraisal value.
Ready to get started? You can start your refinance or mortgage application online now.
Protect what’s precious
Consider Selling Your Home
Selling your home is a drastic measure but if you are unemployed for a longer timeframe than expected, or if you think you will be unable to go back to work due to an injury, illness, etc., then it may become your best option.
In most cases however, if you contact your mortgage broker right away, you will have other options available to you.
If you have lost your job and are concerned that your mortgage renewal may be denied, then contact Matrix Mortgage global today. One of our professional brokers will be happy to assist you.
Don’t Miss: How Do I Sign Up For Unemployment In Washington State
Programs That Give You A Break From Making Payments
If a temporary hardship, such as a job loss, causes you to fall behind in your mortgage payments, a forbearance agreement could help you.
Forbearance Agreements in General
With a forbearance agreement, your mortgage servicer agrees to reduce or suspend your monthly mortgage payments for a set amount of time. At the end of the forbearance, you generally must resume the full payment and get current on the missed payments, including principal, interest, taxes, and insurance. You can usually do this by:
- paying the lender a lump sum
- paying a portion of the overdue amount along with your regular mortgage payment over time, or
- completing a modification in which the lender adds the amount you owe to the loan balance.
Sometimes, the servicer can extend the forbearance if your hardship isn’t resolved by the end of the forbearance period. You won’t be subject to foreclosure during a forbearance period.
FHA Special Forbearance for Unemployed Homeowners
If you have an FHA-insured loan and you lose your job, you might be eligible for a “special forbearance” . This program is designed to give homeowners a chance to stay in their homes until they land a new job and resume making their regular mortgage payments. The program was due to expire in August 2013, but FHA extended it indefinitely.
A SFB could last one year, but there isn’t a maximum term limit. Also, it might be followed by a payment schedule based on your ability to pay or another option that will cure the default.
How To Refinance While Unemployed
Refinancing a mortgage loan to one with a lower interest rate can save you a significant amount of money each month depending on the size of your existing loan. If you recently lost your job, these savings can ease some of the financial stress you’ll face when looking for a replacement position. The challenge is that most lenders won’t refinance the home loan of borrowers who are unemployed. Convincing lenders to do this is a challenging, but worthwhile, task.
1
Shop around by calling several mortgage lenders across the country. You’ll find that the majority of lenders won’t provide housing refinances to unemployed borrowers. But not all lenders have the same policies some will refinance loans if unemployed borrowers can prove that they have enough savings and other income streams to afford their new mortgage payments.
2
Make copies of the financial paperwork that proves that you have a large enough supply of income–whether in the form of savings, investments or other revenue streams–to afford your mortgage loan, even without the benefit of a steady job. This paperwork can include your bank checking account statements, any rent statements you might receive each month, dividend statements, your most recent federal income tax return, retirement savings account statements and any other piece of paper that shows that your income remains strong even without a regular paycheck.
3
4
5
References
Don’t Miss: Can You Get Food Stamps On Unemployment
Learn How To Refinance Mortgage When Unemployed With Help Online
It could be highly challenging to get your home refinanced to a lower rate while you are jobless. Not many lenders could be willing to take the risk of lending you the money. Besides, to qualify for home refinancing, borrower needs to be current on your existing monthly mortgage payments for the past 12 months. But probability of getting approved will be much higher if a sustained approach is followed.
Mortgage After Unemployment And Employment Gaps
This Article Is About Mortgage After Unemployment And Employment Gaps
Qualifying For A Home Mortgage After Unemployment And Employment Gaps:
- Many mortgage loan applicants assume they automatically need two years of continuous employment history in order to qualify for a mortgage loan
- This is not true
- You can have one or more gaps in employment in the past 24 months and qualify for a home mortgage
- Per agency mortgage guidelines of FHA, VA, USDA, Fannie Mae, Freddie Mac, borrowers can qualify for an owner-occupant primary home loan with gaps in employment in the past 24 months
- However, many lenders may have tougher guidelines when it comes to gaps in employment in the past two years
- All mortgage lenders need to follow the minimum agency mortgage guidelines of the loan program
- However, lenders can have higher lending guidelines that are above and beyond of the minimum agency mortgage guidelines called lender overlays
- Therefore, some lenders may tell you that you do not qualify for a mortgage if you have not been employed with the same employer for the past two years
- This employer has its own lender overlays on employment gaps
- Gustan Cho Associates is a national mortgage company with no lender overlays on employment gaps
Read Also: How Do I Sign Up For Unemployment In Washington State
Can You Get A Home Equity Loan If You Are Unemployed
Home EquityloanIf youequitycouldyour
If you own a home and have home equity you can get a home equity loan even without a job. Home equity lenders primary focus is your homes equity. Many times, people starting a new business, new Canadians or temporary job loss can leave home owners without conventional income to qualify under.
Secondly, do you need income to get a home equity loan? Requirements for borrowing against home equity vary by lender, but these standards are typical: Equity in your home of at least 15% to 20% of its value, which is determined by an appraisal. Debt-to-income ratio of 43%, or possibly up to 50% Credit score of 620 or higher.
Similarly one may ask, can I borrow money if I am unemployed?
It can be harder to get a cash loan if you’re unemployed, but it is possible. If you can‘t provide proof of income, lenders are less likely to offer you a cash loan. The best loan terms and rates are often reserved for customers with a good credit history, and for those in employment.
How can I get a loan with no job and bad credit?
Maximize Your Appraisal Value
The appraisal is an important part of the refinancing process. During an appraisal, an appraiser will tour your property and give you an estimate of how much your home is worth. Lenders require appraisals because the appraisal assures your lender that theyre not loaning out more money than your home is worth. Maximizing your appraisal value can increase your chances of qualifying for a refinance. This is especially true if you want to take cash out of your equity.
Use these simple tips to increase your home’s value before your appraisal:
Read Also: What Ticket Number Is Pa Unemployment On
Mortgage Officer Ghosting Me
Its been a week now and still NO RESPONSE. The assistant completely ignored me after first reaching out and setting up the call. Do you know why? Its because when we confirmed the call on Thursday, I told him that I no longer have a paycheck. He and his mortgage officer at Citibank decided that I was not worth their time, even though they were the ones who reached out to me first.
I finally got a hold of him today and ripped him a new one. To be successful in business, youve got to look past the short term hurdles and build long term relationships. Such relationships blossom into potentially new opportunities over time.
Your long term relationships also tend to offer referrals for more business. He apologized and asked if we could try again, but I shut him down. I kept imagining how many more unpleasant encounters Id gave with him over a 100 day mortgage refinance process and shuddered.
How To Get A Mortgage With A Seasonal Income
If youre seasonally employed and work only part of the year, you may have trouble qualifying for a mortgage to purchase or refinance a home. Whether your work is truly around a season, such as landscaping or snow removal, or something you do on the side, this type of employment can be categorized as sporadic.
This wont disqualify you from a mortgage, but it does make the process a little tricky. Heres what you need to know to get a mortgage with seasonal income.
Take the first step toward the right mortgage.
Apply online for expert recommendations with real interest rates and payments.
Don’t Miss: What Ticket Number Is Pa Unemployment On
Benefits Of Refinancing A Mortgage During Retirement
When you make the decision to refinance your home mortgage, youll generally obtain a lower interest rate or you may choose to lengthen your loan term. These two factors will make your monthly mortgage payments lower, which also lowers your expenses and creates more space in your budget.
Another strategy that may be beneficial to your budget is to refinance your mortgage into a shorter loan term. This will increase your monthly mortgage payments but youll pay off the loan sooner. Youll also benefit from paying less interest over the life of the loan.
Be sure you have the extra income to afford this larger mortgage payment until the end of the loan term. Once youve paid off your mortgage, your monthly expenses decrease substantially, so you wont need as much retirement income in your later years.
You may also find refinancing your mortgage during retirement to be beneficial if you already have a lot of equity in the home. You can opt for a cash-out refinance, which allows you to take out that equity as cash. During the refinancing process, you may also benefit from a lower interest rate with your new mortgage terms.
When you cash out the equity in your home, you have a lump sum of money that can help ensure your retirement funds last. However, its important to use this money wisely for your living expenses or to re-invest. Spending it frivolously leaves you in the same financial situation and you may need to look into additional sources of income to stay afloat.
Your Thoughts About The Loan Term
Can a 70-year-old get a 30-year mortgage? Absolutely. The Equal Credit Opportunity Act’s protections extend to your mortgage term. Lenders can’t deny you a specific loan term on the basis of age.
The loan term you’re comfortable with has much more to do with your finances than your age. Many seniors use a 30-year mortgage because of its relatively low monthly payments, but you might depending on your intentions for the house.
In most cases, you don’t need to worry about what will happen to your mortgage if you pass before it’s paid off. Your loved ones can usually sell the house to repay the remainder of your loan, but if you want your family to keep the home, you may want to set up a life estate and set money aside or plan on using insurance to cover the mortgage.
Protect what’s precious
Also Check: Sign Up For Unemployment Tn
