Refinance question

[ettenyl38]

I have owned my home for 9 years. I currently owe 97000, but the house is worth around 200,000. I have been late many times with my mortgage, but not to the point of foreclosure. I spoke to someone regarding financing my home. I am attempting to get 50,000 cash from the refinance to use as a buyout.

I have been advised that because of my credit score, I can probably get a refinance cash out at 15-20,000 at 9%. I was told that the money will be set up in an account in which the mortgage company can automatically deduct the money, thus my mortgage payments will be on time for 6 months, which will raise my credit score and allow me to ultimately obtain the 50,000 that I need for a buyout.

Does this sound more like a refinance or is it really just a loan with a 9% interest rate? Is this good advice or is someone trying to dig me in a hole? Thank You

Current rate is 7%

[firstsource]

First:

This could be a great deal for you if your goal is to get 50K in cash as soon as possible. I would pay 200-300 for a consultation with a lawyer to make sure that this in on the up and up. Are they putting just 6 months of payments into a new account for you? What happens after that? What happens to the rest of the money?

With your credit and mortgage payment history the rate seems very low. The lender may be charging you extra money in closing costs to lower the rate however. Just be careful that they don't start at 9% and when it comes time to close tell you that the rate had to go up to 10.5/11%.

These type loans normally have a prepayment penalty of 2-3 years. Be very careful that you have the penalty period explained to you.

Second:

Why are you late on your mortgage payments? Why are things going to be better once you have taken out the 50K? It will be a long time before you are able to get a loan at 7% again. The way that rates are going up it may never happen. So think long and hard about what you are doing.

If time is not of top importance then make the payments on your current mortgage on time for a year. Then you may qualify for a 2nd mortgage,and use that loan to take out the 50K.

Charles