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Three Options for Refinancing a Jumbo Home Loan With Reduced Income

[Aug 5, 2009.]


For homeowners with home loan amounts of $417,000 or less, the Obama Administration's Home Affordable Refinance Program can help get that tough refinance done. This so-called "conforming loan limit" is acting as a sort of dividing line between those who are eligible for government mortgage refinance assistance and those who aren't.

It's not really a surprise, then, that many holders of jumbo home loans (loans above $417,000) are feeling a sense of hopelessness about refinancing their home loan. This hopelessness can set in especially hard for borrowers suffering from reduced income due to unemployment or cut hours.

But before giving up, consider these three options for refinancing a jumbo home loan:

1. Jumbo Loans May Qualify for the Home Affordable Modification Program

 Although it's true that the Home Affordable Refinance Program does not apply to jumbo loans, the Obama Administration's Home Affordable Modification Program does contain eligibility for certain jumbo mortgages. Check out the details of the program here.

Borrowers who are paying more than 31 percent of their income to housing expense (mortgage, taxes, insurance) may qualify for this modification program--even for jumbo home loans.

2. Get a Co-Signer

Not the most appealing option in the universe, sure, but tough times call for tough measures. If Mom and Dad are sitting on a paid off house, have ample retirement savings, and don't want to see their children (or grandchildren) suffer the impact of a foreclosure, co-signing may be the best option available.

Especially in the case of reduced income, Mom and Dad's income can make a difficult refi possible.

3. Contact (Harass) the Bank Repeatedly

Not to put it bluntly, but borrowers whose debt-to-income ratios have been skewed for the worse by reduced income have to work a lot harder for a jumbo loan refinance than the rest of America. Part of this hard work entails contacting a lender directly and trying to work out a plan that respects borrower circumstances.

But don't just base such arguments on an emotional appeal. If good credit history is there, if unemployment is the reason why a refi is temporarily impossible, if job leads are coming down the pike, mention all that and more. Develop a personal relationship with the lender if at all possible.

And use numbers to make it clear that a foreclosure is in no one's best interests. Here are some foreclosure cost figures that help make the point that refinancing is the best option for both the borrower and the bank.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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