I'm refinancing to make repairs on my house. Please see details.?

Question

I only have a credit score in the 600 range because of a bankruptcy. I've been offered over 20,000 cash back with a interest rate or 6.5% but I've been told that this would be an impossible offer for me because of my credit. I was also advised that this may be a scam and all these terms will be changed on the paperwork they give me to sign.
My house is worth around 175,000 to 200,000 and I owe only 77,000 on my current mortgage. Is this deal too good to be true or should I take it? This is a large company making the offer.

Answer 1

I don't know who is pulling your leg in this forum, some have excellent info and others are just plain negative. Others seem to be trying to get business from you, as I understand it this is not the forum for getting business.

Call the person who you are doing business with presently. Ask them to provide you with a Good Faith Estimate (GFE) If they give you the run around hang up and tell them thanks. The only response you should have from them is we have issued you one do you want us to interrupt if for you, or we will fax you another, do you need someone to go over it with you.

The GFE will tell you the cost of the title report, escrow or closing, credit report and appraisal, any points and fees you are charged by the lender and/or broker. If you are in need of someone to go over this form with you, by all means call the broker you are dealing with.

As you know no one in this world work for free so you will be charged for this loan. The method of payment is what everyone is speaking about on the interest rate. Some brokers don't charge the borrower points or if they do they charge very little. In this case they get a rebate from the lender, so your interest rate will reflect this rebate. Don't get excited as you knew you were not getting a free loan and one way or the other the loan had to be paid for. You also knew that you were the one that was going to have to pay for the loan.

Now the other way is they charge you directly for the loan. This method you will see on the GFE the points you are being charged. You will get less money this way. You should check with your tax advisor as most of the points and fees are tax deductable on your schedule A of your federal income tax. In some instances this might be a better way. Each year you are allowed to deduct these fees and points. When you refinance or sell the property you may take out any remaining fees or points that you have still remaining and deduct them all at once.

Keep in mind that shopping around for a mortgage in most instance will eventually lower your credit score. Each person you go to will want to run your credit report.

Your mortgage broker is probably doing a good job for you. You should not select someone to do a service for you that you have doubts about. If you do about this mortgage broker, simply select someone you trust and move on.

Depending on your current interest rate and if all you want is $20,000 then you might want to inquire about a home equity line of credit (HELOC) This will satisfy you and you will not have to refinance the house and pay off your existing 1st mortgage. You will only have to pay interest on the money you use at the time and you can use as much or as less as you desire.

If your current mortgage interest rate is greater than the 6.5% offerred you might want to consider this loan.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 2

OK, I'm going to reply to your answer as well as each of some of the points the other answerer's made...

6.5% for someone in the 600's FICO score range, isn't that bad, but you need to check your closing costs, and how many points you may be paying to get that.

It is also a little hard to determine whether that is a good rate for your specific situation because there are many variables that determine your rates and options and you did not provide enough information to properly determine if a 6.5% rate is the best you could personally get.

Also, it depends on what type of program and options you have with your loan, generally speaking a 5/1 ARM would be cheaper than a 30year fixed for instance.

As a mortgage planner, I want your business, but I also like it when people 'keep me honest' by shopping around for other rates and services. Because in the end, it's not about the rate all the time, it's about the service, communication, and timeliness.

IMHO, yes I put my contact info on my posts, if I do well answering someone and they decide to give me a ring to help them with their situation great, but I do my best not to blatantly advertise here. I wouldn't work with anyone using Y! Answers to advertise their business, it shows desperation imho.

As far as it being an outright scam, it's always possible, you didn't say what company it was so I can't comment as to their reputation. There are times when little things are changed for valid reasons, like a 'rate lock' ran out so your Interest Rate (I run into this with borrowers who are slow in submitting paperwork for instance) changed or a variety of other valid reasons. It's the non-valid reasons that you need to be diligent in watching out for. Lenders and brokers are people too and far from perfect, but ultimately it's your choice to sign the papers, and they only make their money if you do. So if you make it to the closing and the terms aren't what you were expecting, and there are no valid reasons for the differences in what you were expecting, don't sign.


Anyway, sorry for rambling, I hope that helped some in answering your questions. I think the 6.5 is about average for what your needs are based upon the limited information you gave, but I personally think I could do better and could get you up to 75-100k back if you really wanted / needed it.

Answer 3

Even with the cash out, you're only around 50% loan to value. You're not A paper, but you should be able to get a pretty decent loan. Since you're subprime, you're looking at a loan with a prepayment penalty unless you buy it off by accepting a higher rate.

You're in a refi situation, so you're free to walk away if they change the terms at closing. Just don't pay for anything more than the credit report (about $20) up front, and make certain you're the one controlling the appraisal, so they don't have anything to hold over you.

If you're in a time-critical situation, consider applying for a back-up loan. This gives both lenders incentive not to play games with you, and it gives you another option beyond "sign the papers or don't." It also gives you negotiating leverage at the end of the process, "I don't have to sign company A's papers. I'll sign company B's papers." This can be all it takes to keep greedy BS Artist Loan Providers in line, when neither the size of their company nor their BBB rating really means anything. I've got a whole bunch of useful strategies like this on my websites.

Answer 4

Depending on not only your credit, but your income, ltv, and many other factors, you may be able to qualify for the 6.5%...

just be aware that the company may be charging you extra fee's to get the 6.5%...

WHere the rates are at now, id say it is going to be hard unless you have perfect credit, great income, and a low LTV...

Being that you have indicated otherwise id say the company is definitely charging you to give you the rate, or they are in fact trying to scam you with a "bait and switch"...

Its very commonand highly illegal, but unfortunately rarely regulated...

Your best bet is to talk with someone that has a portfolio of investors to 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. 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
Licensed Loan Originator
Providential Bancorp
312-264-6448

Answer 5

Here is a strategy.

Borrow min 10 000 or max 15 000 and repair your house for that amount.
This will provide you a better loan.
When the renovations are finished have an estimate of the value of your house.
If necessary go on with refinancing and renovations.

Answer 6

I just rated out your scenario and I came up with a mid 7 range because of the BK. 6.5% still looks like it can be ratebuydown but it will cost you about 4K. Yeah crazy! So in your case what I would do is ask for a GFE and have them lock the rate. Look out for Discount Points aka BuyDown Rate.

If its one of the TV ads than definately buyer beware. If its a local bank than maybe.

No matter what because of the BK you are still considered subprime. Even having a 600 after the BK crash is very good.

Answer 7

Please please please be careful!!!

I took a class in home buying/home loans and there are so many bad eggs out there in the loan world that you don't want to take a chance. It is most likely too good to be true!

Go to the government's HUD (housing and urban development) webpage and find your county's office and call them. They can look everything over, they know who is disreputable, and they will do it for free. They will most likely be able to point you in a good direction.

Don't lose your house! Don't sign anything until you have thoroughly researched it!

Good luck!

Answer 8

I work for United Lenders Group and I work with over 45 different banking companies so I could get you a mortgage loan no matter how your credit is.
916-860-0804
keyon

Answer 9

apply on my site and I will hook you up. We are doing 6.5% all day long, on 30 or 40 year fixed loans. check it out... www.westcoasthomemortgage.com

I own it; I will take care of you!

Answer 10

you should look for a lower rate.