Step 1: Gather the Documents
You will need to gather quite a bit of information, but once the information is all together it will make the rest of the process much easier. Gather this information for each person who will be listed on the loan paperwork.
A.    Employment Records

1. W2’s
2. Your most recent paystubs for the past 2 months
3. Employment history for your last 3 positions, including dates, addresses and phone numbers and salary information

B.    Tax & Bank Documents

1. Past 2 years tax documents
2. Past years bank statements (some lenders require more)

C.    Credit Card and Loan Documents

1. Recent Mortgage statements
2. Most recent credit card statements listing how much you owe and monthly payment
3. Most recent car loan statement listing how much you owe and monthly payment
4. Any other loan or debt information – what will be needed is total current balance and the monthly payment amount

D.    Asset Information

1. Statements of any stock, investment, IRA, 401k accounts
2. Valuation of any cars, boats or other major assets you own
3. Bank statements of any other investment accounts
4. Property tax documents for the home you are refinancing
5. Title information on the home you are refinancing

E.    Personal Information

1. Residence history for the past 7 years
2. Social security number

Step 2: Fill Out the Application
Using the information you gathered, fill out each line of the application using the relevant information.  If it asks you for the type of mortgage loan and terms, leave that section blank as you do not know yet which loan you will accept. The more complete you can be on your bad credit mortgage refinance loan application, the better the chances of having it approved right away without delay.

1. Property Information Section
   Since this is a refinance, fill in your current property information. You will likely be asked how the title is currently held, how you would like the title to be held on the new loan, and the current value of the property. You can leave current value blank if you do not yet have an appraisal.
2. Borrower Information
   Here you want to list all of your personal information – name, SSN, residence history, etc. Be as complete as possible, missing information can cause delays.
3. Employment Information
   Fill in complete information on current and previous employers. Check with your employer on how they like to handle income and employment verification requests and be sure to list the correct information on how the lender can contact your employer.
4. Income and Expense Information
   Use your paystubs to fill in the information on income.
5. Assets and Liabilities
   Take a look at your credit card and loan statements to fill out the liabilities section. Use the asset information you gathered to fill out the asset section.
6. Signatures
   Depending on the form, you may need to sign the document in multiple locations.

Tips & Tricks

• If you get stuck at any point, ask for help from your bad credit mortgage lender or broker. They are familiar with the forms they use and can help explain exactly what the form is asking for.
• Try to think of all your sources of income. Do you have a small part-time business where you earn an extra $100/month? Don’t forget to list it. Pensions, annuities and other regular sources of income can really help with the income portion of the application.
• If you have a long history in the same field, ask the lender how they would like you to list it. Let’s say you’ve been an electrical engineer for 25 years but recently have switched jobs 3 times in the last 5 years, letting them know your long history can help.
• Personal Letter –I have found that it can help to write a personal letter explaining your situation, why you are applying for the loan and how the loan will help you and your family. If you can provide character references (not family members) who the lender can contact, that can be a help too. This letter can help the lender put a face on your application and become more vested in helping you get your loan approved.
• Keep a copy of your application and use it for future loan applications. Next time all you will need to do is update a few areas and it will make the whole process much faster.

Conclusion

Filling out a mortgage application isn’t hard, it’s just time consuming. The tips and tricks above should help you have success in your application. Remember to talk with your lender if you have any questions. With the information provided above, you should be able to gather the necessary documents quickly and get your application filled out so you can qualify for a great bad credit home mortgage refinance.

photo credit: Casey Serin

Overview

A refinance loan is different than an origination loan in a couple of respects. First, there is already a loan in place which is generally a good thing. If you’ve made your payments on time, hopefully your credit has improved some since you first acquired the loan. Second, there may now be equity in the property to draw on when refinancing. With the housing market today however, not all home owners are finding that they have equity. There are a few programs that will loan more than 100% of a home’s value.

Get prepared, know the facts and then start shopping for the right bad credit home refinance armed with the right information that can save you thousands of dollars.

Credit Worthiness

Just like when you first purchased your home or your car, your credit score will be an important factor in the kinds of refinance options you have available. Know your score, know what blemishes are on your credit reports and if possible have a written statement explaining the reason for any late payments or other derogatory information. Depending on your credit score, you may not even need a bad credit mortgage refinance.

Equity

Before you start looking for a particular program, it’s a good idea to know how much your home or car is worth. For homes, get a ballpark appraisal from a local real estate agent. You want to know if your house is worth more or less than what you owe on it. Find your most recent mortgage statement – that will be needed to verify your balance.

For a car, check out values on Kelly Blue Book to see what the current value of your car is and compare it to your car loan statement.

A refinance with bad credit is much easier to accomplish if you have some equity built up.

Types of Bad Credit Refinance Loans

• Bad Credit Mortgage Refinance – There are many refinance programs available for homeowners just as there are many programs available for home origination loans. In a way, you are shopping for a new mortgage altogether when you refinance. Refer to our articles on bad credit mortgages to get a broad background on the types of mortgages available.
• Bad Credit Auto Refinance – Most people refinance their car loans in order to lower the monthly payment. When you do refinance, consider the amount of time you want to be repaying your loan. You can lower your payment by either reducing the interest rate or by lengthening the term of the loan. If you have improved your credit since you originally purchased the vehicle, you may be able to negotiate a lower interest rate but keep your initial term which means you won’t be extending the life of the loan. Generally speaking, refinancing an auto loan is fairly straightforward. If your current lender does not have any available programs, make sure you shop around.

Summary

Refinancing is a major undertaking, particularly for bad credit home loan refinance. It is just like shopping for a new mortgage. Refinancing your auto loan is a bit simpler. With either kind of refinance make sure you know your score, know what you can afford and take the time to comparison shop.

I hope you have enjoyed this series of articles on Bad Credit Loans. If you have I would love to hear from you.

The entire series of articles is listed below for reference.

Bad Credit Loans | Part One: Loans for People with Bad Credit
Bad Credit Loans | Part Two: Mortgage Loans for People with Bad Credit
Bad Credit Loans | Part Three: Car Loans for People with Bad Credit
Bad Credit Loans| Part Four: Personal Loans for People with Bad Credit
Bad Credit Loans| Part Five: Bad Credit Refinance

photo credit: woodleywonderworks