How Do I Negotiate a Mortgage Refinance If I've Lost My Job

You would like to take advantage of current low interest rates, but you also happen to be unemployed. With the recent downturn in the housing market, banks have become more restrictive in their lending policies. However, it may not impossible to negotiate a mortgage refinance even though you have lost your job.

First, know your credit score. Banks are more willing to work with people whose scores exceed 700. Obtain a free copy of your credit rating from one of the major credit reporting agencies such as Experian, TransUnion or Equifax. Next, determine the amount of equity you have in your home. If you already have a high amount of equity, banks are less likely to lose money if you default on your mortgage. Study your balance sheet, looking at liquid assets and investments. Banks tend to give stronger consideration to people whose assets tend to outweigh liabilities. Does another household member have steady employment? If so, banks may look favorably upon an income stream in your household, even if it is not yours.

Your lending officer will be interested in your prospects for employment. If you have received a job offer, ask your new employer to put the offer and your start date in writing. Be prepared to give a copy of the job offer to your banker. Banks also give scrutiny to your job history. If you have a pattern of job-skipping, or large gaps in your employment dates, banks may not want to help you with a mortgage refinance. Banks may be more willing to negotiate with you have worked in a field with a relatively low unemployment rate, rather than one that has been decimated by the current recession.

As a possible last resort, you may want to ask a family member to be a cosigner on your mortgage. Approach this step with caution. Not only might you and your relative’s credit ratings be at stake, but your relationship risks being damaged as well.