Why can't I refi when unemployed when home is worth 3x + what I owe & I have $500k in retirement $$?

I'm approximately 5 years in on a 15 year mortgage & owe approx $110k.  My home is worth between $475k - $500k, and I have $500k + in retirement savings.  However despite the equity & my assets, I've found it impossible to refinance without an income.  I just want to refi to a 30 year to lower my monthly payments until I get back on my feet.  Any advice???
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October 13 2013 - Washington
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Answers (9)

Your looking for a loan modification, even with that you need to show the ability to repay. 
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October 15 2013
Profile picture for Pasadenan
It is one of the reasons I choose a 30 year mortgage at a higher rate and pay it down at a 10 to 15 year schedule... is something should come up, I reduce the auto mortgage payments to minimum, and transfer all other payments to zero percent interest credit cards, until cash flow is restored.
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October 15 2013
Because without an income I can't qualifying to refi a new loan, I'm hoping there's some way to "restructure" my current loan -- keeping the current, higher rate but simply adjusting the length.  Since I already have the loan & the bank would make a lot more interest, it seems this would be a win win solution -- but it doesn't look like there are any possibilities.  Thanks for the helpful information.
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October 14 2013
Without income to demonstrate ability to make the payments, you will not be able to obtain a mortgage.  A brief explanation of why:  Mortgage lenders will soon be tied to "QM" or "Qualified Mortgage" lending guidelines. This simply means that the borrower must qualify for the mortgage based on income.  The idea of having lots of equity can not stand on its own to qualify.   While the "QM" rules haven't officially began,  most lenders have their own overlays in place to essentially follow the guidelines now.

If you are having trouble making ends meet and don't see employment in the near future,  then maybe speak with your financial advisor about withdrawing some retirement funds.  There would be a penalty if below 59.5 years old, and the income is considered taxable. But still a much better alternative than missing payments. (your tax rate is likely low since no earned income).
Best of luck!
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October 14 2013
http://www.bankrate.com/calculators/managing-debt/annual-percentage-rate-calculator.aspx
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October 13 2013

Maybe you dodged a bullet?

Do some research and speak to several financial advisers.

A new 30 year loan could have potentially cost you more than penalties for pulling money out to bridge this (temporary?) circumstance or a total payoff.

 

10 years from now, you will not have a mortgage.

 

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October 13 2013
Profile picture for wetdawgs
"Zero risk"?   Ah, yes, they've redefined "zero risk".   We don't know your age, so don't know if you are withdrawing from retirement savings or can without penalty.  Perhaps those are tightly locked up. 



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October 13 2013
Thanks.  That's pretty much what I've found.  Completely insane, isn't it?  If they foreclosed on me, they'd make a bundle, so why not?  So nice that the new laws benefit people who don't responsibly pay bills but not those of us who are zero risk.  alas....
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October 13 2013
Profile picture for Pasadenan
That's typical bureaucracy for you.  They don't care that you can't make the present payments, they only care that the numbers say you can't make the new payments!

It is typical; when people need new loans or loan modifications, they can't qualify.  If you qualified for the loan modification program, due to when your loan was taken out, you might have a solution.  Otherwise, I haven't seen a solution yet, other than to be able to document income for 2 years.

Occasionally you can still find "no document" loans, often used to be called "liar loans" as people would put down anything they wanted on the forms.  But one is still liable for perjury and fraud if they fudged the info.
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October 13 2013
 
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