I tried to sell my home (like everyone else in Las Vegas) after losing my job. I was unable to find a buyer. I got a new job six months ago and have decided to instead take my house off the market and stick around. Can I get approved for a mortgage refinance or will the fact that my home was on the market disqualify me?
As a fellow Nevadan, I understand your dilemma. These days many mortgage lenders do, too. In the past, refinance mortgage applicants were often told they needed to either have a property off the market (not listed with a real estate agent) for six to 12 months or take a mortgage only if there was a prepayment penalty included. Today, they are more flexible.
Explain refinancing circumstances
You have to disclose the home's status to your lender. If you don't, the appraiser will discover it anyway. And then, you'll just look sneaky. Your loan officer will probably ask you to furnish a letter from your real estate agent as proof that you have taken the property off the market. You are also likely to be required to provide a letter explaining the job loss, the decision to try to sell your home, the acquisition of the new job, and the decision to stay.
Here is what Fannie Mae has to say about refinancing a recently listed property:
The subject property must not be currently listed for sale. It must be taken off the market on or
before the application date, and the borrowers must confirm their intent to occupy the subject
property (for principal residence transactions).
On the other hand, FHA has no requirement that your property be off the market for a specific length of time. However, you have to sign a document stating your intent to occupy the property for at least a year. If an underwriter has any reason to believe that you intend otherwise, he or she can make your life more difficult.
Other potential difficulties
Other things may trip you up--the new job (if it's in a new field), local home values (if you have lost home equity), or credit issues (stemming from your period of unemployment). If any of these come up, you may be able to refinance through the Home Affordable Refinance program (HARP) which allows more flexible qualifying and lets you refinance a Fannie Mae or Freddie Mac loan even if your property is underwater. Likewise, FHA mortgage lenders let you refinance with only 3.5 percent home equity and you may get approved with credit problems if they were isolated instances attributable to your stint of unemployment. Best of luck to you and thanks for writing.