Home Refinance Even with Poor Credit Mortgage Loan
By Lorraine WatkinsMortgage Credit Problems Columnist
There are a number of actions you must take to keep from paying more than necessary in interest or from losing your home.
How to Start
Pull out your planner right now and schedule 30 minutes every day for the next five days to handle the preliminary tasks to refinance your mortgage. Here are the actions:
Understand the Need for Speed--Especially in a Bad Credit Situation
There are three reasons that sooner is better than later in the case of home refinance. First, some loan programs have cut-off dates or limited amounts of funding and so it is first come, first served. Second, interest rates are elastic, and as of this writing, they are heading higher. Third, if you wait until you are in foreclosure, there may be nothing that can be done to save your home. Make a quick start by completing the form on this Web site. You might find help very fast.
Understand that You are Not Alone with Your Credit Problems--for Better or for Worse
According to a June 2009 report by Fannie Mae and Freddie Mac, in Q1 2009 there were 243,824 new foreclosure starts (loans that were submitted to attorneys for foreclosure), a roughly 60% increase from the previous quarter. There were also 615,000 mortgages that for the first time were 30-59 days late. When you think of these first lates as the funnel that feeds foreclosure starts, (although certainly not all lates will foreclose) you will get an idea of how many people may be in line ahead of you with applications for home refinancing. Although it might make you feel better to know that so many others are in a world of hurt, delay just makes things worse.
Contact your Loan Servicing Company
Contact your loan servicing company (the company to whom you make your payments). Take notes about what it offers and what you will need to do to next. Allocate time in your planner to comply with their requirements.
Do a Little Research
Familiarize yourself with the Making Home Affordable programs (www.makinghomeaffordable.gov). VA and FHA loans are not eligible under MHA, but FHA refinance programs are available. Search the Internet to find a few sites that offer competing mortgage refinance rates. These sites are especially handy because you enter your information only once and then get replies from multiple vendors. Save the best information to your Favorites list or to your computer for quick reference later.
Understand the Difference between Eligible and Qualified
As you research, you will find that each loan has eligibility conditions. However, just because you may be eligible does not necessarily mean that you will qualify for home refinance or for some mortgage refinance rates. For example, under the Making Home Affordable refinance plan, you may eligible because you have not been late on more than one payment in the last 12 months; however, you may not qualify if you have a history of late payments on other obligations.
Gather Your Mortgage Documents
You will need copies of the most recent pay stubs, tax returns and balances for outstanding obligations for everyone on the note. If you have a second mortgage, you will also need its documentation. Finally, you might need a letter explaining your current circumstances and why you need to refinance. Do not write this 15 minutes before you need it; schedule a time, write it, and then go back and edit. You want to make the best case possible for yourself.
Get a Copy of your Credit Report before Refinancing
Although the lender will almost certainly pull your credit report, you will want get it because the lender is not obligated to give you a copy, you do not want any unpleasant surprises, and knowing exactly what is on your report gives you the opportunity to get bad information removed.
Get Free Counseling
HUD offers free counseling about your refinance options. Contact them at 1-800-995-4673.
Why You Can Win
It is in everyone's best interest that you are able to remain in your house. Foreclosures are painful for the homeowner and expensive for the lender. Do not give up!
See How much You Paid Yourself
If you have recorded the time you put in to getting refinanced, you can calculate how much you earned per hour-refinancing your mortgage might be the best money you've ever made.
Source: MortgageCreditProblems.com, Wall Street Journal, Mortgage News Daily, Making Home Affordable.
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