With unemployment staying high since the recession, a lot of homeowners are finding it hard to keep up with their mortgage payments. A potential solution to this is to refinance your mortgage to take advantage of the current low interest rates so that your monthly payments become more affordable. Can I get refinance on my home equity without a job is a question many homeowners are asking these days. The simple answer is yes, but it is certainly not easy.
Lenders always look for evidence that you will be able to meet the monthly payments on your mortgage. Without a job and a steady income, you are seen as a risky borrower as your savings could soon run out and you may default on the mortgage. If that happens, the lender will have to foreclose, which is not a desirable situation for them as they can incur huge costs during the foreclosure process and the sale proceeds may not even cover the whole mortgage amount. That is why when you ask a lender, “can I get refinance on my home equity without a job”, most of them will say no. However, there are some ways in which you can get your mortgage refinanced even without a job. Here are some of the options that you can explore.
For many people, a regular job is not their primary source of income. There can be several alternative sources of cash inflow. If you are retired, you may have a steady pension income that can cover the mortgage costs. You may be earning good returns on your retirement fund or other investments, and if the fund is large enough and has a conservative risk profile, a lender may consider it as a steady source of income. If you are an independent consultant, freelancer, or are engaged in any other form of self-employment, you might be able to convince the lender about your repayment ability.
If your spouse has a steady and large enough income, the lender is likely to consider your refinance application more favorably. If you have difficulty keeping up with your mortgage repayments, there is a good chance that your spouse will help you out.
Finding a cosigner who has a steady income and a good credit score can also help convince the lender that mortgage payments will be met. The cosigner could be anyone – a parent, a relative, or even a friend.
Your creditworthiness, as reflected in your credit report, will play an important role in the lender’s decision to offer you a refinance deal. Having large assets other than your home can also convince lenders that they would be able to recover the loan amount in case of a default. But most importantly, you need to have a large enough equity built up in your home. If you don’t have a job and your equity is less than 30-40%, most lenders will consider the loan too risky.
If none of these options work, you should ask lenders directly how can I get refinance on my home equity without a job. Different lenders may have different criteria that can help you qualify for the loan. You should also be prepared to pay a higher interest rate on the loan, as until you are able to find a job, your risk profile will remain unfavorable.