How to Refinance Land Mortgages
- 1). Put together the financial paperwork that will show your mortgage lender that you'll be able to make your new mortgage payments on your land loan. This includes copies of your two most recent paychecks, two most recent federal income tax returns, and bank and checking account statements. Also make copies of your current credit card statements and other loan statements.
- 2). Contact the mortgage lender of your choice. Keep in mind that you are not required to work with the bank or lender that is currently servicing your land loan. Tell a loan officer that you are interested in refinancing your land loan. The lender will ask for some basic information including your name, social security number, estimated gross monthly income and address of the land that you own.
- 3). Tell your lender how much money you owe on your current land loan. This is crucial. Lenders require a significant amount of equity from borrowers to approve their refinance request. For a home loan refinance, borrowers usually ask for 20 percent equity. For land loan refinances, though, borrowers often need as much as 50 percent equity in their properties to qualify.
- 4). Give your lender permission to check your credit. Lenders rely on a three-digit credit score, which shows how well you've paid your bills in the past, to decide who qualifies for refinances and at what interest rate. If your score is below 620, you might not qualify. If you do, your interest rate might be too high to make a refinance worthwhile.
- 5). Send your lender the financial paperwork you compiled in Step 1.
- 6). If your request is approved, sign the closing papers provided by your lender to make the refinance official.
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