How to Refinance a Home With a Judgment on the Title

by Joey Campbell ; Updated July 27, 2017

Items you will need

  • Contact info on the owner of the judgment
  • Payoff on judgment.
  • Two years of W'2s
  • 30 days of pay stubs
  • Banking information
  • Copy of driver's license
  • Contact information for your lender
  • Mortgage account number

Judgments that are still open are on public record and usually show up on your credit report. They definitely show up when a title search is completed. Since a judgment can be a lien (or the threat of a lien) against your property, .it sits in second position behind your first mortgage, making it the same as a junior lien, or second mortgage. If the first mortgage is paid off, then the judgment moves to first place position. It is for this reason that most lenders will require the judgment to be paid off in a refinance if there is enough equity to do so.

Refinancing a Mortgage With a Judgment

Step 1

Discuss the judgment with your lender. The lender will be able to tell you what value you must have in your home to pay off the mortgage balance, judgment balance and closing costs. Begin your loan process with the lender who will order an appraisal on your home to prove its value.

Step 2

Contact the company that holds the judgment to get either a satisfaction letter if the judgment is in error or the correct amount to pay off the judgment.

Step 3

Follow up with your lender and supply updated documents as requested.

Step 4

When you are clear to close, the lender will schedule closing with the title agent. Request a copy of the closing statement before closing, and have lender go over closing figures with you. Ask questions about anything you don't understand.

Step 5

At the closing, ask questions about anything you don't understand. Sign and date documents as agent requests. You are officially closed on your refinance, but the funds for payoffs will not be sent out for three business days

Tips

  • When you close your loan, the title agent will file the payoff of the judgment and make sure it goes on public record correctly. When you receive your satisfaction letter from the judgment owner, get a copy of your credit report and make sure it is reported as satisfied. FHA offers an exception. If there has been a payment plan already set up with a payment history, the lender may waive the requirement of payoff, but this decision is a lender decision.

Warnings

  • Most states require a court hearing to determine if the judgment can become a lien against you. If you never received your notice to court for this purpose, call the court where the judgment was filed and request a hearing.

About the Author

Joey Campbell spent eight years in real estates sales and property management. She has been active in residential and commercial mortgage for the past 23 years in the Southeastern U.S. Campbell has attended hundreds of seminars, and has written and conducted workshops on subjects such as credit, debt excelleration and prequalifying for residential mortgages.