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Purchase or Refinance?


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It's great to find this forum. I am in need of some advice and it looks like there are some really knowledgeable people here.

Two years ago, my sister and I bought a house together--rather, she bought it and since my credit sucked, I simply moved in and paid the mortgage. The mortgage has always been paid out of my bank account and is with Aurora. It is an interest only loan at the present time.

My sister has since gotten married, moved out, and would like me to "truly" own the home. I am trying find the best way to approach this.

My scores right now are 590, 605 and 604. I am a teacher, and make about 40,000 a year with supplements. The last two years' income tax statements show $46,000-ish.

We got the townhome at a great price, as a friend buys homes and resells. We paid $180,000, and the townhomes in the same neighborhood, with less improvements are selling in the high 200's to low 300's. Real estate is booming in Florida.

I am faced with two choices: My sister is willing to quit claim half the interest in the home to me and then refinance under my name only.

Or, I would buy it for the original price. Since the value has increased quite a bit, that might be a favorable way to go.

I have a few disputes (legitimate ones) out there being settled. the Fico simulator, if it is to be believed, says that paying my small revolving accounts (less than $1,000 owed) would increase my score by 20-50 points. I find that pretty hard to believe, but if it is true, I could do this over a three month period.

I have worked the same job for 7 years, and much of my bad credit can be attributed to my husband, who I will officially be divorced from next week. The accounts, however, are in my name.

I owe less than $10,000, most of which is an auto loan.

Any advice? Also, as a teacher, there are rumored to be some loan programs. I just thought I would put some feelers out there before I hit the pavement running. :-)


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