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Own home - very low fico


chinadol72
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I own my home, but have a low fico score (under 500). I want to take a loan out on my home and pay off existing debts (cash-out refinance?). My home is worth between $60,000.00 and $70,000.00. I would appreciate any suggestions and/or possible lender information. My income is sufficient enough to make a mortgage payment on this amount of a loan (if I consolidate all my debt) and not have but two small student loans.

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I presently have late credit card payments (total debt in credit cards - $9000.00). I have started a new job (w/i the past 6 months) after graduating from college. I bought my home with inheritance money I received when my mom died (it was her home). I am making payments to the IRS on my inheritance and would greatly benefit from consolidating all of my debt. I have also had several hard inquiries on my credit report. I did this prior to really understanding how to approach a cash out refinance. Thanks for your response

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Chinadol, I just have one off the wall question...

Will this refinance solve your debt problems... Or will it have the potential of just freeing up space to rack up more debt...

It's just an off the wall question... I am a big fan of debt consolidation loans... But the last one I did, I unfortunately racked up more debt and now I feel more burdened than ever...

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Well, considering the debt consolidation would pay off credit cards, student loans, federal and state taxes (the last three of which are NOT in default), nearly everyone would be paid off and I would have one payment a month (and two small student loan payments a month). It makes sense to me since I am now in a stable, well paying job, as opposed to being a college student. I am determined to fix my credit problems and NEVER be in this situation again.

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You should qualify for a FHA loan, the fees are higher for closing, and your home has to be in almost perfect condition, but those are the only drawbacks.

If you have collection accounts, they will have to be paid off, but sounds like you want to pay off all of your bills anyway.

If you are in Texas, you will be limited to how much you can take out of your home, as the max is 80% of the value of your home.

Charles

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Do you own your home free and clear? If so, you should be able to cash out at least half of your equity with a conventional mortgage. Automated underwriting should give you an Expanded Approval...probably Level 2 or 3. Not the greatest rates, but better than sub-prime.

From an underwriting perspective it makes sense to lend you up to 50%. If they have to foreclose, they generally make back about 60-70% of the value of the home after all the costs they incur... so no matter what, the lender should make a profit and that's the bottom line.

Also, is your home a manufactured home? That could change things too.

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I do own my home straight out. It is not a manufactured home. It is brick. The overall condition of the home is good. I had my home appraised over a year ago at around $62,000.00, but I requested a very, very modest appraisal since I had to pay out half of the amount of the home to a sibling as a part of our inheritance. I am guessing (and just guessing) the home would sell around $70,000 or a little more in my area. Thanks to everyone for information. It really is beneficial.

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