Why You Should Refinance Your Mortgage Before Job Loss
By Heindrick SoMortgage Credit Problems Columnist
Homeowners around the nation are facing a combination of troubles that can often make refinancing a mortgage much more difficult. While slower home sales and declining home equity have been major obstacles, many are worried about their employment stability. If you or your spouse is anticipating a possible job loss, here are a few things every homeowner should carefully consider regarding a mortgage refinance.
It's Easier to Refinance Your Mortgage While You Still Have a Job
In addition to your credit history and home equity, mortgage lenders pay special attention to your household income and employment status. While some lenders may be willing to adjust the terms of your existing mortgage after a job loss, there are very few lenders who will write new loans if their income qualifications are not met. With this in mind, you should seriously consider your refinancing options as soon as possible if you think that you or your spouse might lose a job.
Refinancing a Mortgage Can Help Cut Your Monthly Expenses
Although spirits may be low, refinancing your mortgage can be a viable solution during tough financial times. In some cases, it could help you avoid bankruptcy, foreclosure, and other predicaments in the future. There are many options when it comes to refinancing a mortgage, but if worried about income, consider refinancing into a mortgage with a lower interest rate and lower monthly payment. And although you'll want to refinance as soon as possible, remember to pay attention to the terms of your new mortgage and don't neglect the basic mortgage shopping process.
Refinancing Your Mortgage In Anticipation of a Job Loss
If you are able to anticipate a pending job loss, many headaches and difficulties can be avoided if you can successfully refinance before losing your job. Unfortunately, if and when the job loss occurs, it will be much harder to refinance even though this is when you'll need the most help. As difficult as refinancing with bad credit may be, refinancing without a job can be even tougher.
Finding the Right Mortgage
Depending on your individual circumstances, refinancing into a mortgage with a variable rate or longer term could also help you pay a lot less each month. Short term mortgages with lower adjustable rates are likely to be more attractive--just don't overlook your long term plans to eventually pay off your mortgage. In fact, with interest rates nearing historic lows, a traditional 30 year fixed loan could still save you money--while still providing you with long term stability as well.
You can begin by seeing if you can be matched with one of the lenders in our database - it's completely free and there's absolutely no obligation, so act now!
About the Author
Heindrick So is a mortgage consultant at a local Bay Area Real Estate Brokerage--specializing in residential wholesale lending. Heindrick frequently contributes to various finance columns, ranging from home loans and mortgages, debt management, and other personal finance topics.
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