How to Refinance Car Loans With Credit Problems

When you are financing a car, you may come to the point where you want to refinance it to get a better annual percentage rate (APR), as well as a lower payment, if possible. Refinancing a car is similar to refinancing a home-you attempt to get a new loan, but at a better rate. When you are having credit problems, this can be hard to do. However, there are still ways to refinance your car loan, even if you are having problems with your credit at the moment.

Tips for you:

1. Improve your credit score as best as you can before trying to refinance your loan. It can help to talk to a credit counseling agency to see the best way to pay off your debt and improve your score. If you can get your score raised, you may get a better APR when you refinance your car loan. Consider putting off refinancing your car until you can improve your credit score.

2. Refinance the loan along with a co-signer. Find a trusted family member or friend who not only has a good credit score, but is willing to take on the responsibility of a loan. While you will still be making the payments, they will be responsible if you default on the loan, so be sure to choose this option with caution. However, having a co-signer with good credit will help you refinance your loan even if you have credit problems.

3. Offer to put as much money down on the new loan as you can. A down payment on the new loan will not only help lower the car payments in the future, but also can help you get the loan you need even during credit issues. You may also get a lower finance charge per month if the lender sees you make the effort to pay as much as you can on the car.

4. See if you can switch lenders when you refinance your loan. Your current lender may be reluctant to lend to you if you are having financial problems, but you may be able to find a new lender that is more lenient. Talk to the car dealership where you first got the loan and explain your situation. They may be able to help you find a loan company that they do business with that will refinance your loan, even if you are having credit problems.
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How to Refinance a Bad Credit Car Loan

Having bad credit may not be your fault, but when the time comes to look for a loan, that bad credit can hurt you tremendously. This method will help you refinance a high interest car loan into a lower interest car loan, even with less than perfect credit.

Tips for you:

1. Check the value of your car. If you owe more on the car than the car is actually worth you will not be able to refinance it. The reason for this is that in the event of a repossession, the bank would not be able to recover their money. (See resources section for KBB website)

2. Reread your original contract. The goal of refinancing is to get rid of those sky high interest payments. If, however, a "prepayment penalty" was written into your original loan you will not be able to refinance without refinancing the entire amount owed on the interest into the new loan amount.

3. Check your contract for scams. If you financed through a dealership, it is very possible you are paying extra every month for "perks" you did not know you had like roadside assistance or an extended warranty. Canceling these programs may free up enough money to make refinancing not necessary.

4. Start working on your credit. Making regular payments on your car improves your credit every month. Try to dispute off some negative payments, or have some old late notations removed. You don't have to have perfect credit, but this cannot be attempted with abysmal credit.

5. Wait 6 months from the original purchase. You cannot refinance an auto loan until 6 months or longer have passed from when you bought the vehicle. This gives you time to get to work on your credit.

6. Pull your credit score. When enough time has passed to refinance, pull your credit score to see what you have to work with. Always know your own buying power.

7. Start shopping around for a low interest auto loan. Do not apply yet, since you do not want anyone to pull your credit themselves. Give them your score and let them tell you the rates you qualify for.

8. Choose the bank or credit union with the lowest rates and refinance the vehicle for lower monthly payments.
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Loans for Building a New Home

Choosing the right type of loan when building your dream home can save you thousands of dollars over the term of the loan. Here is some information pertaining to the types of loans available to individuals wanting to build a new home from the ground up.

New home loans come in four different varieties: FHA, VA, Conventional and Adjustable rate. All of these loans will require different things from a home buyer, and all will have to incorporate the cost of construction and any changes made during the building process.

FHA Loans
FHA loans are one of the easier types of loans to qualify for. When building a new home, FHA will require all proof of income, debt and any other factors needed to qualify for a normal home loan. After this, they will issue a pre-approval, dictating the total and maximum amount that you are approved for once construction is complete. If costs exceed this amount once the home is complete, you will be unable to qualify, so it is important that you stay within budget.

VA Loans
Similar to an FHA loan in the pre-approval process. Qualified veterans can apply for a VA home loan when having a home built providing that the home meets certain energy efficiency requirements. Qualifying documentation and proof of income must be provided before the start of construction as well as again once a closing date is set for the home.

Conventional Loans
Conventional loans provide home buyers the most flexibility when it comes to financing construction. Because these loans provide for different construction circumstances, the home buyer has more control over when funds are disbursed to the contractors. However, they do not provide the same amount of control if purchasing a home from a pre-fab or tract builder.

Adjustable Rate
Adjustable rate construction loans allow for home buyers to qualify for higher sales prices of homes up front. Because of this, it is easier to foresee and provide for any construction mishaps. The interest rate will remain low for the first three to five years after building the home, and will increase from that point on. These are the best types of loans for construction of a new home, as they allow for unforeseen expenses without forcing you to walk away from the home should it come in over budget.

Be flexible if something that you must have in your home comes in at a higher price, and be prepared to make some concessions when it comes to items on your want list. Not having this list and flexibility can mean having to walk out on your dream home if it exceeds your finance approval limit.
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How to Get a Loan to Build a Home

Many people interested in building a home must acquire a loan from a lender. This loan is often called a construction loan and is based on the value of the finished product. Once you are able to secure the loan, a builder is paid throughout the construction process. Construction loans are a bit more complicated than home mortgage loans and may involve some extra paperwork.

Tips, Obtaining a Home Construction Loan

1. Find a lender that offers the construction loan you are looking to obtain, and speak with a broker who has experience in your area and with this type of loan.

2. Submit your Form W-2s, paycheck stubs, employer records and credit reports to a mortgage lender, so it can pre-qualify you for a home construction loan. This also allows the lender to inform you of the loan amount you may obtain.

3. Find a builder who is able to construct the home you want to build for the amount of money available through the loan. A builder needs to be approved by the lender and prove he has a strong reputation and is able to complete the project.

4. Give the lender the final plans of the home, which include estimates and proposals from the builder outlining the cost, timeline and payments needed over the course of the project.

5. Lock in an the interest rate for the loan. You may want to let it float to see if the interest rates go down, but once you find an acceptable rate, lock it in.

6. Complete any documentation for the construction loan and gain final approval from the lender. Some banks require that you obtain liability insurance for the construction. Once this is finished, the building of your home is ready to commence.

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How to Get a Home Loan to Build a House

A home loan to build a house is often called a construction loan. This type of loan is based on the value of the finished building and is structured in such a way that the builder receives payments throughout the construction process. Through inspections and appraisals, the lender is able to approve the construction process and secure the loan for the homeowner while paying the builder as agreed. Since this type of home loan is a bit different than traditional home loans, there are a few areas you need to understand before getting this type of loan.

Tips for you:

1. Get prequalified for a home loan by applying for a construction loan with your mortgage lender. The lender will prequalify you by looking at W-2s, employer records, paycheck stubs and credit reports to verify that you qualify for the loan. The lender will let you know how much of a loan you may obtain.

2. Find a construction company or builder to design a home based on the amount of money able to be borrowed from the lender. Most lenders will require an approval process for the builders to ensure they are reputable before allowing them to proceed with the home construction.

3. Obtain lender approval of final plans of the home, including full cost estimations and proposals provided by the builder. The builder will design a proposal for the lender, outlining costs, time lines, and a schedule of draws, or payments to be made over the course of the building process to the builder.

4. Sign documentation and establish the home loan to build a house with the lender after final approval of the construction plans has been made by the lender. This secures the home loan and gets the building started.

5. Regularly communicate with the builder to work out any problems during construction. Handle inspection and appraisals required by the builder, if needed, throughout the process and at the final stage in the home-building process.

6. Finalize the home loan with the lender after the lender has conducted the final inspection and appraisal process with the construction company and builder. This establishes the home loan, and the borrower (homeowner) is required to begin making payments on the home loan.
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How to Understand the Home Loan Process

The home loan process is often confusing and frustrating. Follow these steps to demystify it.

1. Understand that in order to finance or refinance a loan the lender requires documentation to verify and substantiate your employment, credit and financial situation to assure its investors that you have the ability to repay the money. This documentation may consist of tax returns, recent pay stubs, bank statements, verifications of employment, deposit and rent or mortgage, appraisal, purchase agreement, divorce decrees, bankruptcy papers and any other information the lender deems necessary.

2. Understand that you will have to provide a completed loan application and the requested documentation to your loan agent. The loan agent will be the intermediary between you, the borrower, and the underwriter. The underwriter is the person who goes through the documentation and information you have provided with a fine-tooth comb to make sure everything fits the program requirements. You will not be able to speak with underwriter - it is the loan agent's job to communicate information to and from the borrower.

3. Expect to wait. It may take several days to a week to get the initial response from the underwriter. The underwriter will either approve the loan as it is or, more likely, provide a list of items that need clarification or additional documentation.

4. Expect to be asked to provide additional items. Once you give these to your agent, it will be a few days before you hear back again. The underwriter may come back to the agent several times with certain "conditions." Don't be concerned. The underwriter is simply doing an underwriter's job. At this point, what you have is conditional approval - meaning, your loan is approved pending removal of these conditions.

5. Understand that the entire loan process typically takes between two and four weeks, possibly longer, depending on the particular circumstances of the loan. Loans for self-employed people, people with poor credit, or people with unusual circumstances often take longer because of the additional documentation required.

6. Realize that once the loan is approved, the loan papers will be sent to the escrow/title company or your attorney. The escrow officer or attorney will add other documents to the file created from information received from the lender. Once these documents are prepared, the escrow officer or attorney will contact you to set up an appointment for you to come in and sign your papers.

7. Expect to wade through and sign a mountain of papers. The escrow officer or attorney should provide you with a copy of everything you sign.

8. Understand that from the date you sign your papers, it will be another two or three days until the loan is funded, which is when the money is transferred.

9. Know that the loan will close, or record (with the county), one or two days after the loan has been funded. Once the loan is recorded, the transaction is complete.
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How to Find an FHA Rate for a 30-Year Fixed Loan

Federal Housing Administration (FHA) loans are government insured home loans that allow for flexible credit guidelines, down payments as low as 3 percent and reasonable closing costs. These mortgages are insured by the FHA, which is part of the U.S. Department of Housing and Urban Development (HUD). One type of FHA loan is the 30-year fixed interest rate mortgage. Finding the current interest rate will help you decide if it's the best way to go.

Tips for you:

1. Visit individual bank websites to determine the mortgage rate that is currently offered for the 30-year fixed FHA loan (see the Resources section). Many mortgage lenders have a section on their website that allows you to check current mortgage rates. Since these mortgage rates change depending on economic conditions, it may be best to apply for FHA loan and lock in the interest rate when its low.

2. Visit your local bank branch or credit union and ask the mortgage loan department for the current interest rate on a 30-year fixed FHA loan.

3. Use a third-party website to get simultaneous quotes from multiple lenders offering loans in your area. The benefit is that it allows you to compare the current interest rates as well as the points charged by each bank. Mortgage websites include and (see the Resources section).