Mortgage Advice?

Question

I currently have an Option ARM with a 2.2 margin (MTA-based), and right now I am at about 6.4%. The balance is $535,000; the home has been appraised at $680K. I want to refinance right now for 3 reasons: 1) I want to buy out an investor for 67K; 2) I want to get something fixed for even a relatively short time, say a 5/1ARM, considering the rising rates; and 3) I want to pay off all other existing debt (~18K). I need a cash out of at least 111K. My problem I am seeing is my income (96K) and credit score (median of 645) may not be able to swing it. Unfortunately my wife's score (575) is too low to help out, although her income (65K) is pretty good. My score was around 700 when I bought the home in October, 2005, but since then I have opened up several credit card accounts, some of which are pushing the limit. Am I screwed here, and just have to wait for our scores to improve?

Answer 1

You have a lot of good responses here to take into account..

What i can say that i think all other responses are missing is the fact that EVERY LENDER HAS DIFFERENT GUIDELINES IN WHICH THEY LEND MONEY!! . Some lenders specialize with low credit, some only work with good credit, etc.

I have lenders that will lend a 100% financing as low as a 600 credit score.. You are at a 645, and you make plenty enough money to qualify.. (As you can see it is very different then other banks that responded to your question)

Your best bet is to talk with someone that has a portfolio of investors they work with. There are a couple reasons i suggest that:


1. If a loan officer can shop your loan to multiple lenders they are bound to find one or more willing tho lend to you. By looking at multiple options and programs you will be sure to find the lowest costs and rates...

2. As another response said if you on your own call multiple banks to see what you qualify for, EACH AND EVERY LENDER will HAVE to pull a seperate credit report. The more times it is pulled the worse your credit gets. Now, when you work with a loan officer that can shop among their investors, they only have to pull one credit report, and use that copy to shop mortgage lenders for you..

So not only do you keep your credit score where it is, you dont have to worry about any of the busy work..you let the loan officer do it for you..

My name is Jason Fry, and I am a loan officer with Providential Bancorp, a nationwide mortgage lender. I'd be happy to assist you in a refinance, or at least be able to let you know exactly what YOU QUALIFY FOR. You can then make a more informed, and educated decision whether it would be the right move for you.

Feel free to give me a call at 312-264-6448, or
you can email me at [e-mail].

Thank You,

Jason Fry
Providential Bancorp

Answer 2

After reading all the feedback - You must be totally confused.

First off: Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score.

Second: I am currently doing a cash out refinance - got appraised at 715,000 and she is getting 80 percent LTV (loan amount 572,000) with cash out, and her mid score is 538 with 4 lates in the last 60 days in the past year - so that makes it 4x60 and her rate is 8.99 adjustable for 2 years. Why am I mentioning this. Your score is much better, and your rate will be too -

Third: Do you have a pre-payment on your loan now? If so - what is the term? Since you purchased it October 2005. Need to consider what it will take to get you out of your home. You may want to try a stand alone 2nd - for the difference. Just a thought.

Regardless - You will be able to do what you are wanting to do - at a 100 percent. YOur credit is NOT bad - ok. Good Luck

Answer 3

You can still do it. The rate will still be pretty good. I know of a program with no MI, down to 625 100% Ok. No hit for cash out. There are several programs out there that can help you. Even with a 645 score you may qualify for the same rate as if you were at 700 because of the computer automated underwiting some mortgage folks have available. E-mail if you want to discuss your options. I am a soft sell Mortgage Broker and there is a very good chance I can help you. Let me know but Am very sure you can get that all done.

Answer 4

Yes, you're screwed right now. You mentioned that your appraisal came in at $680K, with the cash out that you need and the debt that you want to pay off, you're looking at $731K and that does not include any pre-pay penalty or loan costs. Most pay option loans have a pre-payment penalty I would estimate yours at around $17K. I'd say stick it out, the pay option loan that you have with a 2.2% margin is a pretty good loan right now. 6.4% is about market rate for a 30 year fixed rate. Your credit score is however high enough to do 100% financing with either one loan, or an 80% 1st mortgage, and 20% second mortgage. When was your appraisal done? You may have more value now. Contact me if you have any questions.

Answer 5

different mortgage solutions exists, I have outlined some below

(I would also suggest you read : http://umgarticles.atspace.com/mortgage.htm)

Pension Plan
Using a pension plan to accumulate the balance of your mortgage is a tax free saving scheme. The balance of your house will be saved over a period of time until you can pay your final balance. If you do intend to use a pension fund to save for the balance of your house, consideration should be taken into account to open another pension fund for retirement purposes too.

ISA Plan
With an ISA plan you invest in stocks and shares via an Individual Savings Account (ISA) - which is a tax-free method of saving. This method of saving may not be suitable for most borrowers. Before considering this option you should consult with an independent financial adviser.
Endowment
An endowment is still the most common type of interest only mortgage which also provides life assurance cover and a fixed payment for investment. The endowment policy along with the interest only mortgage should in effect end at the same time, leaving you with the ownership of your home and nothing to pay. Endowments have undergone much criticism; this is due to investors being promised high returns from their investments. However lately this has not been the case, borrowers have found their investments have been as good as expected and a shortfall in the end amount of invested cash will not match the amount owed on the current property.
Taking into account the recent problems that have arisen regarding endowment policies it is worth remembering that returns on endowment policies have been pretty good, however you do need to see the term out in full. Also endowments do provide life assurance as part of the actual policy, so in the unfortunate event of a death the mortgage balance is paid in full.
Advantages of an interest only mortgage
• Your investments and savings could accumulate more than the required amount to cover the final payment; this could leave you more cash for your own personal use.
• Some plans have good tax benefits and help reach the required amount it a quicker and cheaper rate.
Disadvantages of an interest only mortgage
• In the unfortunate event of your investments not acquiring the designated amount of cash to cover the loan repayment, the investor could face a shortfall which they will then need to pay. If you are worried about a shortfall on your investment, you should keep in touch with your investor and request regular updates on the situation of your endowment. If the worst comes to the worst, you can increase payments to compensate for the loss of investment.
• Cashing in your endowment, ISA or pension could have adverse effects on the amount of money you have saved over the past however many years. If you do decide to cash in any existing policies you may be subjected to a penalty, this could be a cash amount specified by the investment company/lender. Please seek professional advice if you are worried about the end results of your finances, don’t be too hasty as most policies accumulate more of the cash in the final year

for a complete informational package I suggest you visit one of the many mortgage informational sites the best free one in my opinion is :

also read http://umgarticles.atspace.com/mortgage.htm

Answer 6

Most have had some pretty good answers here. although, you are not going to want to go to banks and credit unions for a creative mortgage type that you are looking for. It just will not be possible for them. Plus, you don't want to be filling out every application that is given to you. Your interest should be talking to the right person that understands your situation and is willing to help out. So much for his comment on "Yahoo's"

The mortgage type that you are looking for is out there. Your score is going to give you some problems, as is your debt to income ratio, but there are programs that will allow us to do this.

The rates will be decent. Actually, you would probably still qualify for conventional financing. Just because your score dropped because of your credit cards does not rule you out as a possible candidate for conventional type financing.

I would recommend that you contact me and I may be able to help you out with this. You can reach me at timothy.kazee@americanhm .com.

You gave a good amount of info on here, but there is still more to the picture than what you have given. I will be here for you when you are ready.

Good luck!

Answer 7

Go to banks and credit unions, fill out applications, and speak with actual bankers. Better to have concrete answers than to get the speculation of countless Yahoos.

Answer 8

wait for scores to improve.. pay down the balances on your credit cards 1st