Refinancing a home while receiving workers' compensation payments from an employer or insurance company will be difficult unless you already have substantial savings and the disability is nonpermanent. Lenders will request that you provide income records going back at least 12 months to gain approval for a refinancing loan. You will also need a good credit score (680 or above) to qualify for mortgages at the prime rate.
Gather documentation about your assets, liabilities and current income. Get a letter from your physician explaining the injury for which you are receiving compensation payments. If you can get a letter from your employer as well explaining your current work status, that may also improve your chances of winning approval for a refinancing loan.
Compare refinancing interest rate offers from online rate-quoting services like BankRate and MortgageLoan. You will need to provide some basic information about your credit score, current income level, the value of the mortgage that you will be replacing and your level of home equity.
Select the best rate offers from major mortgage loan companies from the free rate quote services. You may also request refinancing rate quotes from local banks and credit unions to gain a broader sense of the rates offered to someone with your financial situation.
Apply for refinancing loans from the institutions that offered you the best rates. Review any additional fees such as closing costs attached to refinancing offers to ensure that you get the best deal possible.
Wait to receive information from the companies that you applied to.
Reply to requests from refinancing companies accordingly. Use the documentation that you gathered to prove your income and ability to pay the refinanced mortgage. If you have been current on your mortgage with your current income level and have a good credit rating, you may be able to gain approval for a refinancing loan.
Complete negotiations with the lender that offered you the best deal on a refinancing loan. You will likely need to explain your financial situation in greater detail than you would otherwise due to the fact that you live on workers' compensation. You will also need to report any additional income that you receive aside from that insurance payment. If you have any such diversified sources of income, it will increase your chances of gaining approval.