Scubasteve2365 Posted January 17, 2008 Report Share Posted January 17, 2008 Hello all,I just wanted to gather some opinions on what I'd like to do.My fiance' bought her home in April of 06. $135,000 at an 8.4% ARM that is set for adjustment in April of 08. I'm not sure what the rate is going to but I do know the monthly payment is jumping by $220.I'm not currently on the loan, it is shared between her and her mother although her mother doesn't live at the house now, she did when they purchased the home. Now it's a matter of whether or not we can finance together and qualify for a prime loan, preferably fixed but a prime ARM may be more suitable because we plan to sale this house as soon as the market will allow us a viable offer.My middle score is at least 665 [Equifax at 680, Trans at 665, Exp currently unknown]My fiance's middle score is 675.I make about $50,000 a year and she makes about $40,000 a year. We both own our cars and have credit cards with relatively small balances. [our combined minimums would be less than $100 month]My credit is spotless the past 2 years, but I don't have any real long standing tradelines that aren't deferred school loans. In April I will have had 2 low limit credit cards with a 1 year age, low utilization, and a perfect payment history. Hopefully by then my scores will also be a little higher. In addition, I also have a judgment against me for a medical bill, I don't remember ever getting the court notice and it was ~5 years ago. It's only for $400 so I can pay it if need be, I just haven't yet because I don't believe it'd actually help my credit.She has had spotless credit the past 12 months, but 18 months ago she had a late payment on a credit account. It was an issue of having the wrong account number set up for online banking, nonetheless it is there.The house has essentially no equity, do we have a chance to refi at the prime level? Our DTI is great, our credit is so-so, and the LTV should be about 1:1. Any opinions?Thanks Link to comment Share on other sites More sharing options...
ShortBus Posted January 17, 2008 Report Share Posted January 17, 2008 I'm not a homeowner (yet) so I can't answer all your questions, but here is the couple of suggestions that I do have:Do something about your judgment. Especially since it's such a small amount of money. In Ohio, satisfying a judgment is grounds to have it vacated, meaning it can be removed from your CR all together. Your state might be similar. That will generally give you a healthy boost to your FICO. If you genuinely didn't get notice of the suit, you may also want to investigate the rules of service in your state. Though, generally you have to fight it within a year of the judgment (doesn't hurt to research it though).But assuming that you can't get it removed, you need to satisfy it anyhow. Many creditors won't touch you, regardless of how good your FICO is, if you have an unsatisfied judgment on your CR. This is especially true for real estate transactions.Your fiance may want to try to write a goodwill letter to the credit card company she has a one time blemish with if she explains why it occurred. If she's been a good customer otherwise, there's a good chance that it'll work and give her a healthy bump. Even if it doesn't work, it's worth trying. Link to comment Share on other sites More sharing options...
2ndTimeAround Posted January 17, 2008 Report Share Posted January 17, 2008 Hello all,........ opinions on what I'd like to do.........ThanksHi Steve - Welcome First check the value of whats selling around you, your fiance brought the home two years ago, there's a good chance the value might of went up... alittle?.. Has there been any improvements, upgrades?Looking at your credit - you need a 680 to really qualify for a good conforming interest rate. I reccomend looking at an FHA loan -on a refinance, your are looking at one loan up to 95% LTV. The interest rate is fixed - between 6.75% to 7.25% There will be mortgage insurance, but it is low .05% (compared to conforming loans as high as 2.75%).Stay away from doing a 1st and 2nd mortgage - it will take years to develop any equity.As far as your mother-in-law on the title now, she can deed off the title. When you and your fiance refinance the home, you can go on the title. What is important is your income - the ideal debt to income ratio is 43% or lower. Looking at what your are earning, don't think that will be a problem.Now if you had money to buy down the mortgage to a 80% LTV. Then you want to look at a conforming loan.....Good Luck.........My $000000.000002...... Link to comment Share on other sites More sharing options...
jq26 Posted January 17, 2008 Report Share Posted January 17, 2008 There will be mortgage insurance, but it is low .05% (compared to conforming loans as high as 2.75%).I think the decimal place is off by one. My FHA loan from 2007 has HUD insurance that is set at 0.5%/annually. Should be roughly $50/month extra per month on a $135k loan. But, the downside to thisreduced monthly MI is that I had to write a check to pay 1.5% of the purchase price in upfront MI. Not sure if you are forced to do that on an FHA refi. For me, it was $3000 more at closing because of it.Stay away from doing a 1st and 2nd mortgage - it will take years to develop any equity.If the blended rate on loan 1 & loan 2 combined is identical to the FHA rate, then equity will accrue at the exact same rate as if it were one 30 year mortgage. There is no difference. The problem is, you probably won't be able to find a piggyback loan with a reasonable rate right now. Link to comment Share on other sites More sharing options...
firstsource Posted January 18, 2008 Report Share Posted January 18, 2008 When you refi an FHA loan, the UPMIP (UpFrontMortgageInsurancePremium) gets credited to your account, ie you get credit for the time not used and so for your next loan the UPMIP is not the same amount of $. I have the formula somewhere and will add to this post when I find it.Charles Link to comment Share on other sites More sharing options...
firstsource Posted January 18, 2008 Report Share Posted January 18, 2008 Scubasteve,FHA or FHASecure should work for you. I am sure that she has a prepayment penalty, but if not you could do the refinance now while rates are low. No one knows what rates are going to do in the next few months, but probably not much change. Charles Link to comment Share on other sites More sharing options...
jq26 Posted January 18, 2008 Report Share Posted January 18, 2008 Speaking of rates, my younger brother has the password to go online and check their par rates (he sold their loans a broker) for a large lender. As of Wednesday, they were 5.375% for 30yr and 5.125% for 15yr fixed. And since the market has been in a tailspin the past two days, they are probably much lower. Just yesterday, the 30 yr bond was up 22 ticks! Cheap money is back. Link to comment Share on other sites More sharing options...
firstsource Posted January 18, 2008 Report Share Posted January 18, 2008 This rate information is good benchmark information. I don't quote rates until I have seen someone's complete picture because rarely do people "fit the box". I know that the median FICO score, yes median scores, are 720. Anyway, I just saw the following I copied below:-----------Just when home prices and interest rates are really starting to look attractive, Fannie Mae and Freddie Mac announced increased delivery fees and new Loan-Level Price Adjustments, making credit much more expensive for potential homebuyers and homeowners looking to refinance. These increased fees are mandatory and have nothing to do with your mortgage professional. They are simply Fannie and Freddie's way of recouping losses associated with the recent rise in delinquencies and foreclosures. Under Loan-Level Price Adjustments, additional costs are assessed to mortgages based solely on FICO credit score ranges that fall below 680. In the mortgage industry, this is called risk-based pricing, and it can really add substantial costs to a mortgage if borrowers aren't credit ready. -------------It is not fair that FNMA changes the rules the way they do, "if you don't have an approved loan and have not locked the rate, here are the new adjustments. Oh well.Charles Link to comment Share on other sites More sharing options...
kemet Posted February 1, 2008 Report Share Posted February 1, 2008 The days of the 185% refinance are over! If you truly have no equity, you owe as much as the property is worth, whre are you going to get a loan for 100% of the market price? In a falling market, when lenders have tightened their lending standards?Bill Link to comment Share on other sites More sharing options...
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