Conventional loans are usually not available in this circumstance, leaving only those loans offering much higher interest rates. The caveat here is that along with the higher interest rates comes a higher monthly payment (unless the homeowner has accumulated a substantial amount of cash to buy points), which may possibly “kill the deal” if the borrower cannot prove conclusively they will be able to afford the new, higher mortgage payments.

Income

Income requirements for restructuring are the same as that for a first time conventional mortgage loan. The maximum amount of income allocated to a mortgage payment cannot exceed 28%.

For self-employed borrowers: o Last year and the previous years signed federal corporate tax returns.

o Last year and the previous years signed federal partnership tax returns.

o Current year to date (calendar or business year) signed state tax return forms.

Credit score requirements are becoming increasingly strict. If you’re looking to restructure an existing mortgage, make sure you have money for closing costs and a substantial down payment along with solid documentation of your income. Solution:It’s easy to borrow from your 401k plan account. Moreover, with a 401k loan, you pay yourself the interest and not to any lender. Taking out a loan from your 401k account will not leave you with sufficient cash during your retirement years.