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Refinancing Your Home with Bad Credit

 

Many people who have had poor credit have been able to purchase a home with a bad credit mortgage loan.  If you have this type of loan but have worked to improve your credit scores and credit history, you may be able to qualify for a traditional mortgage refinance.  Mortgage rates are historically low and now is a great time for mortgage refinancing.  Because of the new guidelines, more paperwork is required than there used to be, so if you gather the following documentation in advance, you will be able to sail smoothly through the refinancing process. 

 

1. A government issued photo ID and another form of ID will be required.  This could be a driver's license, passport, or state ID. 

 

2. If you have recently retired, make a cop of your pension/retirement letter or Social Security Awards letter. 

 

3. If you are currently employed, locate your 2 most recent paycheck stubs and most recent W-2 form. 

 

4. If you are self-employed, own investment property, or if some or all of your income is from commissions or bonuses, you will need copies of your two most recent tax returns that have been filed with the IRS.  For a self-employed person, 1099s are considered part of the tax return. 

 

5. If you own real estate such as an investment property, be sure to find a copy of the most recent property tax statement and property insurance declaration page. 

 

6. You will the most current 2 months bank statements, so if you bank online be sure to print them out in such a way that your name, address and the account number as well as beginning and ending balances show up. 

 

7. Obtain a copy of your credit report early so that you can write explanations that describe what the credit inquiries were for and whether or not an account was opened.  It is a good idea not to have your credit pulled or to open a new account for at least 6 months prior to applying for mortgage refinancing.  If multiple addresses are shown, this is not a problem but you may need to write a short note explaining them. 

 

Because the federal regulations for lending require all of this documentation, if you know what to expect and can gather it in advance, you won't be as frustrated when your loan officer asks you for all of the different pieces of paperwork that he needs.  You won't be stressed out because you can't find something you need because you will have already done your homework.