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Can we refinance without a good income?

February 8, 2012: 5:05 AM ET

Is there any way to refinance that isn't based on just income? My husband and I are both self-employed, so our income is low—about $30,000 to $40,000 per year. Plus, he has been self-employed for less than a year. But we have quite a bit of money in investments (more than $500,000). We have not found any way to refinance, and we hate to see those great low interest rates pass us by. Any suggestions? –Betsy F., Melbourne, Fla.

"Unfortunately, lenders like to see income today," says Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. "Assets can disappear pretty quickly."

Depending on where your assets are under management, however, it may be possible that your broker or brokerage firm might write a loan based on your asset strength. If you're not with a brokerage firm, you might want to investigate a few to see if they do that kind of lending and what rates they're charging, to see whether it would be worth moving your assets.

If that avenue isn't successful, consider contacting a local mortgage lender. "Some of the larger lenders get so many calls, and it might take two months to get back to you," says Gene Brown, president of Aurora Financial Group in Marlton, NJ. "If you reach out to a local lender or an independent mortgage banker in the area, you have a better chance of sitting down with a loan officer and going through all your different options."

Beyond that, if you're having trouble making payments on your mortgage, you're underwater, or your loan is owned by Fannie Mae or Freddie Mac, you may be eligible for a government programs, such as HARP (the Home Affordable Refinance Program), DU Refi Plus, Open Access, or a Streamline refinance. "There is also a new Freddie Mac program that allows for assets to be worked into the income calculation to help with higher debt ratios," says Drew Aiello, a licensed senior loan originator with Homestead Funding in Clifton Park, NY.
(To find out if your mortgage is owned by Fannie Mae or Freddie Mac, check their websites: efanniemae.com and freddiemac.com.)

Exhaust all these options before you give up. "There may be something you can get done because of compensating factors, such as great credit and a lot of reserves," Aiello says. "Nothing is really set in stone."

--Kate Ashford

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