Losing your job can be one of the most difficult challenges one can face. Not only does it affect your self esteem, it inevitably impacts your budget and ability to pay your bills. When faced with this scenario, it is necessary to look closely at your budget to see where you can cut back and save.
Once you start looking, you’ll find many ways to save and the interest on your mortgage may be one of them. While refinancing your mortgage for a lower rate can save you a considerable amount each month, the process of finding a lender may be a bit challenging.
Before completing an application, there are a number of things you can do to put yourself in the best position for success.
1. Use a Broker. Using a mortgage broker will open up a variety of doors you may not be able to access on your own. A broker is connected with a network of lenders and can assist you in finding someone willing to take on your mortgage despite your lack of steady income. Working with a broker is not a guarantee, but they will be able to offer their advice and expertise when navigating this scenario.
2. Prove Yourself. Because you will be considered a high risk loan, you’ll need to prove yourself to your lender. Take the time to gather the appropriate paperwork to prove you will be able to make your payments. This could include bank statements that show any savings you have, investments or other revenue streams like rental income or dividend statements.
If you have a side hustle and can prove additional income from odd jobs or freelancing, that will help establish your work ethic and willingness to pay your debt. Your most recent income tax return or registered retirement savings statements are also important documents to have ready.
3. Credit Score. Repaying any credit extended to you in a timely way will help you establish a good reputation. Paying your bills on time is something you need to have established prior to refinancing your mortgage, but if you have been diligent it will impact your credit score. Lenders will want to run a credit report and ensure you have a good payment history. If you have a high score, they may overlook your employment status and consider your other attributes.
4. Co-Sign. If you have someone willing to co-sign your mortgage, it will increase your chances of having your application approved. This person must have a steady income and good credit score. This choice is not to be taken lightly because the co-signer will be responsible to repay the entire loan if you default on payments.
5. Budget. If you don’t already have a working budget, you need to start one as soon as possible. A budget will help you determine what needs to be paid each month and what you can eliminate from your spending until you are back on your feet. Stick to your budget and make it part of your financial plan. When you find a job and life settles down you should continue to use your budget to track expenses and plan for expected and unexpected costs. A budget will also show your lender that you take your finances seriously and are responsible with your money.
While there are some additional costs associated with refinancing your mortgage, it may pay off in the long run. Set up a time to speak with our team at Akal Mortgages. We can answer any questions you may have and advise you about what plan would work best for your unique situation.
When we say YES! We stand behind our promise.®™