Work history key to refinance approval

Dear Dr. Don,
If you are laid off but are lucky enough to get employed quickly, could you refinance your existing mortgage? I have a very good credit rating, and the only debt I carry is the mortgage. Everything else is paid in full. I would like to refinance in order to take advantage of the low rates.
-- Dan Decides

Dear Dan,
Congratulations on landing on your feet. It's a tough labor market out there, and finding a new job quickly after being laid off is great news.

The lender will look at your work history before making its underwriting decision on the loan. It's a good idea to ask the lender how it views your work history before applying for the loan.

Testing the wind before filling out the loan application makes sense because every time you apply for a loan it generates a credit inquiry on your credit report. Credit inquiries stay on your credit report for two years but only influence your credit score in the first year.

The lender will want to verify your employment as part of the underwriting process. A major career change or a big drop in income would trigger a concern by the lender. Lenders typically consider the last two years of job history in verifying employment.

If it makes economic sense to refinance, and your lender is comfortable with your employment history, go ahead and apply for the loan. You can figure out the economic impact of refinancing by using the Bankrate calculator "Will you save by refinancing your mortgage?"