Poor Credit? How to Refinance Your Home Anyway

Refinancing your home can lessen the burden of high mortgage payments, release cash for valuable home improvement projects, or be used to alleviate debt. For the borrower with poor credit, a simple refinance can be problematic. Mortgage lenders are understandably hesitant to give mortgages to people with bad credit. Because of this, there are now specified lenders and brokers that work with those with bad credit. Refinancing with poor credit is now possible, but it may require a bit of legwork.

Step 1

Determine amount of equity in the home. When refinancing, the lower the borrower’s score, the lender likes to see more equity is built up in the home, which may require you to make 20-25 percent payment to build equity in the home and assure the lender that you are less likely to default on the loan.

Step 2

Start with your current mortgage lender. You already have a relationship with your existing lender, so the lender may be willing to work with you in order to keep your business. This is also a great place to get your first rate quote. From here, you can compare other loan offers until you make your selection. Do not be discouraged if the existing lender is unwilling to work with you. Keep looking for lenders that are willing to work with you.

Step 3

Visit online mortgage brokers (see resources). Here you can get compare mortgage rates and find brokers in your area. Visit the offices or email the local mortgage brokers that work with those with poor credit.

Step 4

Choose the lender. Compare the interest rates and types of loans and determine which will fit your situation the best. For example, if you will not remain in the home long, an adjustable rate mortgage will allow you to start with lower payments. But keep in mind that you need to stay put long enough to recoup any fees that were paid for the refinance itself.

Step 5

Apply for the refinance mortgage loan. If you are refinancing through a different lender than your original mortgage loan, you will probably have to provide all of the documentation you provided for the original loan. Although your current lender may not provide the best offer, the lender has all of your information on file, so the time and resources necessary for processing your application will be reduced.

Step 6

Complete the loan. Completion of a refinance loan is simpler than the closing on a home purchase because there are not any other people to deal with. You home will most likely require a new appraisal. Check your private mortgage insurance at this point. If your loan-to-value ratio is less than 80 percent, you will no longer be required to pay this. After the appraisal is complete, your signature will be required on many pages and your refinance loan will be complete.

Warnings

* Your credit score will impact your refinance rate. The interest rate on your refinance loan will be higher if your score is lower than 740. Even small improvements to your score can make a difference in the rate.

* A bad credit refinance can also carry higher closing fees.

For Sale by Owner (FSBO)

In a 2006 National Association of Realtors survey, only 7% of sellers sell their homes without a licensed broker. Owners attempting to sell their own homes, also known as FSBOs (For Sale by Owners), will have many tasks to accomplish with which they may not be familiar. The valuation of the property is just the beginning; timing, marketing, preparing the home, negotiations, and so many other things are hurdles the owner must research and tackle to be successful.

Benefits

First and foremost, when an owner sells the home the realtor commission fees are nonexistent. These fees can add up to 6% of the selling price of the home; this amounts to $12,000 on a $200,000 house. Another benefit is the vested interest the owner has in the sale of the home. It is often the case that realtors work to secure a quick sell without so much worry about the price or conditions on the contract. The owner can set their own schedule for showings and can openly negotiate with a potential buyer without the hassle of sending paperwork back and forth.

Multiple Listing Service

The Multiple Listing Service (MLS) is a national marketing tool that all licensed agents use to share listings and match buyers. Previously, sellers not using an agent had no access to the MLS. Now FSBOs can list their home on the MLS using one of many websites that offer this fee-based service.

Advertising

There are many new real estate services online that cater specifically to the FSBO market. For a reasonable fee, the property is posted online with photographs and virtual tours. Zillow.com, ForSalebyOwner.com, and homesbyowner.com are just a few such sites. Along with this, open houses, full-color brochures, ads in newspapers and real estate circulars, and personal networking are all advertising tools that can lead to the sale of a home.

Challenges

The owner that hopes to sell a home without the help of a broker will face more work than he or she might think. In order to price the home correctly, the owner must research recent sales and home prices in the area. The owner must also know the state laws and regulations of fair housing, home disclosure, sales contracts, and sales negotiations. Financing can also be a confusing category, so the owner should know how to tackle this subject with a buyer.

Warnings

Buyer’s agents are often reluctant to work with owners trying to sell their own homes, even if the home is listed in the MLS. Also, buyers tend to submit lower offers to FSBO homes because they know the owner is saving money on sales commissions. The National Association of Realtors reports that the majority of owners attempting to sell their own home eventually hire a realtor, mostly because buyers typically use agents.

How to Get Your First Home Loan with Poor Credit

Buying a home for the first time can be exciting, but if you have poor credit, it can also be a challenge. One of the main factors that a mortgage lender considers when approving or denying an applicant for a loan is credit history. The good news is that if you have poor credit, there are subprime lenders that are willing to loan money to first-time home buyers with poor credit.

Find a subprime lender for a poor-credit loan.

Credit: alaska home image by Silke Wolff from Fotolia.com

Step 1

Find a subprime lender. A subprime lender is a lender that offers loans to those who do not have good credit. These are not your traditional banks and lenders so the fastest and easiest way to find a subprime lender is to contact a mortgage broker or search your local phone for mortgage lenders that specialize in subprime loans.

Step 2

Submit a mortgage application. Once you find a subprime lender, the next step is to apply for the mortgage. Even if you do not have a property chosen yet, you can submit a mortgage application and the subprime lender will approve you or deny you based on your personal financial information.

Step 3

Submit supporting documentation. You'll need to submit copies of your last two year's tax returns, the last two month's paycheck stubs and copies of the last two month's bank and brokerage account statements. These documents along with the information you supply on the mortgage application are used by the lender to qualify you for the mortgage.

Indemnity Insurance Plan Information

Deciding on which type of health insurance coverage to carry for you and your family can be challenge. An indemnity insurance plan, also known as a reimbursement plan, is the most common type of health insurance plan offered. Understanding the ins and outs of this type of plan can help you decide whether it's the right type of health insurance plan for you.

Significance

The purpose of an indemnity insurance plan is to allow individuals to choose their own health-care providers and to be reimbursed medical expenses no matter who they choose as a health-care provider.

Limitations

While indemnity insurance plans do reimburse for medical expenses, reimbursement amounts vary. While the doctors and hospitals you can utilize are not restricted, how much of the medical expense your insurance policy covers does have limitations. Reimbursement amounts may be limited under an indemnity plan, which means you may have some out-of-pocket expenses.

Benefits

While other types of insurance policies limit doctors and hospitals to providers on the health insurance carrier's list, an indemnity insurance plan does not have this type of a limitation. As opposed to a PPO, where you are responsible for a certain amount of your medical care depending on whether you see an "in-network" or "out-of-network" provider, and you have a deductible to meet, this is not the case with an indemnity plan. Whatever doctor you see, there is not a difference in cost to you. As opposed to an HMO plan, where you have to see a doctor or visit a hospital on the plan's list of carriers, an indemnity plan removes this factor completely. So, another primary benefit of this type of plan is that it is very flexible and reduces your out-of-pocket expenses.

Actual Charges

Under an indemnity insurance plan that pays actual charges, you will receive a reimbursement for the cost of your medical expenses. An actual charges indemnity insurance plan gives you back the cost no matter how much the expense is.

Percentage of Actual Charges

If an indemnity insurance plan offers reimbursement as a percentage of actual charges, then you will receive a set percentage of the actual medical expenses. Again, the reimbursement is regardless of how much the medical services cost. The most common percentage of actual charges reimbursement is 80 percent. For example, is a medical procedure costs $1,000, the indemnity insurance plan carrier will reimburse you $800 and you are responsible for the difference of 20 percent or $200. This percentage can vary by policy, so check with your insurance provider for specifics on what your percentage of reimbursement is.

Indemnity Reimbursement

With an indemnity reimbursement schedule, the insurance company pays a certain amount of the medical expenses per day and for a certain number of days. With an indemnity reimbursement schedule, the reimbursement amount is not determined by the cost of the medical care, but your reimbursement amount also cannot and will not exceed your expenses.

How to Learn Real Estate Law

Real estate law involves dealing with both commercial and residential property, finalizing transactions and finding potential issues, looking into property regulations and boundaries. You can learn real estate law on your own.

Step 1

Research online law libraries. They provide a wealth of information, explaining the facets of law and providing further reading resources for you to look into.

Step 2

Take note of further resources that directly apply to the category of real estate law you’re looking into. If you are researching landlord-tenant law, for example, take note of all the resources you find on that subject. Studying all the information you can find will prove to be advantageous when you apply it in a real-life situation.

Step 3

Visit your state’s real estate commission. You’ll gain knowledge about real estate laws, regulations and requirements for licensing.

Step 4

Consider taking advantage of free real estate advice online. You can not only read online articles that keep you up-to-date on all of today’s real estate information, you can ask questions regarding home selling and buying to get answers from real estate professionals in online forums and on blogs kept by real estate professionals. Select your location and find professionals and stores of information close to you.

Step 5

Look into online universities with courses in real estate law. Courses might cover real estate contracts, closing property transactions and learning how to read a survey. You’ll be able to study from the comfort of home. There will more than likely be a small fee for each course you take.

California Home Warranty Policies

Home sellers or their real estate agents acquire home warranties to protect themselves against lawsuits if something in the house breaks within the first year. The Home Warranty Association of California (HWAC) is made up of the state's warranty providers who offer some of the top home-warranty policies in California.

Fidelity National Home Warranty Company

Fidelity National Home Warranty Company is a member of the HWAC, receiving the association's seal of approval, as well as a good rating from homewarrantyreviews.com. Fidelity National offers one-year Standard and Comprehensive Plus home protection plans to cover California policy holders’ major home appliances and systems. It pre-screens repair technicians and utilize an automated tracking system monitoring the status of your repairs. The company offers optional or additional coverage for certain household items and a 30-day guarantee on labor and parts. Policies are specifically catered to California home warranty specifications, which includes contractor response to a service call within 48 hours, a $55 service fee and guaranteed work for 30 days with a 90-day guarantee for parts. Buyer’s Coverage begins at escrow closing and New Construction coverage begins on the first anniversary of escrow closing.

Old Republic Home Protection Company, Inc.

Founded in 1974, Old Republic Home Protection Company Inc. is not only a HWAC member but also listed by Home Inspections USA. It received a good rating from homewarrantyreviews.com as well. The Comprehensive Plan allows customers to create custom plans by adding options to the Standard Plan. The Standard Plan covers failure due to lack of maintenance, rust or corrosion, improperly installed or mismatched HVAC systems, water heater sediment and unknown pre-existing condition coverage. Optional choices allow coverage of unique systems and the addition of enhanced services. The Sample Coverage plan is for single-family home dwellings under 5,000 square feet. Upgrade options include the Ultimate and Platinum Plus protection plans. All have extra options available for home buyers only.

2-10 HBW Warranty of California

An HWAC member and listed by Home Inspections USA, 2-10 HBW of California offers two types of warranties, the 2-10 Warranty/New Construction Home Warranty, and the Systems and Appliances Warranty/Home Service Contract. The 2-10 Warranty/New Construction Home Warranty must be applied for by the builder of a home who is required to meet underwriting guidelines and agree to follow the terms of his agreement with 2-10. On the date of closing, homeowners receive a Certificate of Warranty backed by 2-10 with the builder’s name on it. The Systems and Appliances Warranty/Home Service Contract covers major home systems and appliances. If one of the systems or appliances that a homeowner’s contract covers breaks down, 2-10 sends a contractor to do the repair. The homeowner pays a deductible and 2-10 covers the rest.

Claiming the Sale of Vacant Land on Your Federal Tax Returns

When vacant land is sold, the sale must be filed with the Internal Revenue Service. You must report the sale on your personal federal tax return if it meets certain criteria. These include whether the land is adjacent to your primary residence, if you owned or used the land as part of your primary residence and whether the sale of your primary residence and the vacant land occurs within two years of each other.

Step 1

Calculate the profit or loss by subtracting the selling expenses from the selling price and any outstanding mortgage balances or tax liens paid out of the proceeds of the sale. Determine whether it's a profit or loss and the exact amount.

Step 2

Report the gain, if there was one, on Schedule D of the 1040 federal return form. Use line 1 if it's a short-term debt, meaning that you owned the land for one year or less. Use line 8 if it's long-term, or you owned the land for more than one year.

Step 3

Report the loss, if that's the case, on Schedule D, lines 1 or 8. The loss is not tax-deductible, but you still have to report it.

Step 4

Fill in the information associated with Lines 1 or 8 in sublines a through e. Enter the amount of your gain or 0 (zero) on subline f, if it's a loss. File the form along with your personal income tax return.

Tip

If the vacant land was used for business purposes or rented for income, you may be required to file IRS Form 4797 to report the sale of the vacant land.

How to Change the Deed or Title to Your Home

When you buy or receive a home as a gift, the deed to the home is the written proof of ownership of the home. It is also referred to as a title. If you need to change the deed on your home because of a name change resulting from a marriage or a divorce, it is a simple process that typically takes about 30 days to complete. Other reasons you may change a deed include death, inheritance, adding a new spouse or adding a child's name.

Step 1

Gather documents. In order to start the name change process for your deed, first get together the necessary documentation. For a name change, you'll need your name change document. For a marriage, a copy of your marriage license is required. For a divorce, you'll need a divorce decree and for a death, you may have to provide a copy of the death certificate, as well as the will that turned ownership of the home over to you. If you are adding a child's name to your deed, you will need the child's birth certificate.

Step 2

Call the title company and inform them that you want to change the name on your home deed, and explain your reason. Title companies usually require you to complete an application and request a picture ID, as well as the appropriate documentation to begin the change process on the deed.

Step 3

Pay the title company. In order to change the name, or add or remove a name on the home deed, the title company collects a fee for their services. The fee covers the time it takes to prepare the new deed and file it with the county clerk’s office where the home is located.

Step 4

Obtain new deed. When the new deed is recorded in the public records by the title company, you will also receive a copy of the deed with the new names on it. File the deed in a safe place as your proof of ownership of the home.

Tip

If you prefer, you can use a real estate attorney to help you change the deed on your home.