coolchicka

My credit's bad..hubby's is good..can we refi?

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I bought a house about 7 years ago. My credit was better at the time, so my husband was not on the mortgage loan. But, now we have a lot of things broken in the home and need cash to do repairs, plus pay off credit cards (the reason my credit is bad). We want to do a refi with cash out now, but now the credit situation is now the opposite..my credit is bad and his is good. However, my income is more than his. (mine-52000/year his 35000/yr) Can we do a refi with adding him with his better credit history, can he just get refi on the loan all by himself, or are we just in the crapper at this point?

I have only had maybe 3 late payments on the mortgage..over a period of over 7 years..and those late payments were not recent (more than over a year ago).

Any help is appreciated.

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RULE #1 - If at all possible ALWAYS keep you and your spouse's credit separate.

If he can refi it on his own absent your involvement then go for it. If not and you apply together two things are likely to happen.

1) You will be denied because of your score

2) His credit may be affected as a result of the possible merging of files thereafter.

This is a huge issue I've written about for 25 years. Separate files for credit, bank accounts etc.. is not a show of distrust between lovers or spouses. It's a sign of strategic intelligence.

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Sound advice above - to add a little bit. Refinancing the house to pay off unsecured debt is a very bad idea. You are then converting unsecured debt to secured debt. It is the beginning of a downward spiral that could very well end up with a loss of your home. There are countless people here in my area that had purchased their homes well before the run up in prices. They then refi'ed during the boom period and now are either way upside down or have lost their homes.

You would be better off to come up with a plan to fix your home without taking on additional debt and to make a plan to pay off your cards. You might consider bartering to get your home fixed - it works for both of the parties involved.

Is your score lower because of late pays, collections and other items? Or, is it just your utilization bringing down your score. In either event, those items are fixable. If its just utilization, then you could have a much higher score just paying off the cards to less than 10% of the credit line. Try the snowball method.

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Sound advice above - to add a little bit. Refinancing the house to pay off unsecured debt is a very bad idea. You are then converting unsecured debt to secured debt. It is the beginning of a downward spiral that could very well end up with a loss of your home. There are countless people here in my area that had purchased their homes well before the run up in prices. They then refi'ed during the boom period and now are either way upside down or have lost their homes.

You would be better off to come up with a plan to fix your home without taking on additional debt and to make a plan to pay off your cards. You might consider bartering to get your home fixed - it works for both of the parties involved.

Is your score lower because of late pays, collections and other items? Or, is it just your utilization bringing down your score. In either event, those items are fixable. If its just utilization, then you could have a much higher score just paying off the cards to less than 10% of the credit line. Try the snowball method.

Yes, my score is low because of late pays and collections. I am in the process of negotiating settlement offers with the CA's to pay them off, but some of them are being hardballs and won't accept anything less than the full amount owed. I just thought doing a refi would be a quick way to get rid of them, get some cash out for repairs, and maybe lower our house payment at the same time. But, maybe I am wrong. Plus after meeting with our mortgage broker yesterday, the loan terms weren't what we expected. We may just take your advice and deal with the repairs another way.

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per some of the govt refi programs, Credit Scores are not considered on mortgages backed by a govt agency.

As far as the CC debt, how much are you talking about?

I would not pay a CA, if it I did not have to. If the original creditors still own the debt, call up the banks and see if you could negotiate a deal with them. If a JDB owns the debt, then get respond to their mailings and phone calls and get them to break the law, if they have not already done so. Start disputing the debts!!

I would not roll your CC debt into the home, even if it pays off the debts and free's up monthly cash flow. I know most mortgage brokers advocate to do so, but your home is not an ATM. Keep any equity you have in it.

Hunker down, cut back on spending and put together a game plan to pay down the CCs. Use any savings from a Refi and apply it towards the other debt till it is paid down and put a little bit aside as a cash reserve.

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per some of the govt refi programs, Credit Scores are not considered on mortgages backed by a govt agency.

bmc100:

Can you explain this more in detail to me? By mortgages backed by govt. agencies, do you mean FHA loans? That is the type of loan I currently have.

One thing our mortgage broker said was if we were to refi with my spouse only, then he would have to do a conventional loan, because FHA refi's look at the credit of both the husband and wife..no matter who is on the initial mortgage loan(me) and no matter who will be on the refi loan(him)...and that they take both credit histories into consideration because we are married. I told the broker I was almost certain that wasn't the case when I got the loan initially (we were married then too), so why should it matter now. He said refi's are handled differently. Was this accurate?

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bmc100:

Can you explain this more in detail to me? By mortgages backed by govt. agencies, do you mean FHA loans? That is the type of loan I currently have.

One thing our mortgage broker said was if we were to refi with my spouse only, then he would have to do a conventional loan, because FHA refi's look at the credit of both the husband and wife..no matter who is on the initial mortgage loan(me) and no matter who will be on the refi loan(him)...and that they take both credit histories into consideration because we are married. I told the broker I was almost certain that wasn't the case when I got the loan initially (we were married then too), so why should it matter now. He said refi's are handled differently. Was this accurate?

I agree with the above - refinancing the house to pay off unsecured debt is a very bad idea. You are then converting unsecured debt to secured debt. It is the beginning of a downward spiral that could very well end up with a loss of your home. Well Said Denita!!!!

What bmc100 is probably referring to are VA loans, the actual credit score is not looked at, however the history is. Late payments, collections, etc will have an impact of being approved for a VA loan. This type of loans are available to you if you served in the military.

Being told to finance in your your husbands name into a conventional loan. If your DTI ratio allows; that is good advice. The interest rates are lower and there is no MI (PMI).

My $00.02 about debt settlement; I mention to my clients to do this on their own. It works. Recently had a lady with $39,000 in CC debt. She settled everything for $12,000 by herself.

Credit card companies if they can not collect on a debt, either file for collection, ending filing a court judgment (which takes almost a year). Many time sell of the debt to collection company's as low as $00.07 of the dollar to collection companies.

Call them up and say in one breath - your have an appointment to speak to an attorney about filing a chapter 7 to eliminate all your debt, but your brother is concerned about your credit. He will give you money towards a settlement. They will respond "How much do you want to settle for"?

Mentioning a chapter 7, if you file they will get nothing. Saying a relative is helping you. They can not request financial information from him. Compared if you have the money to settle, they will want the last six months of banking statements and pay stubs to analyze, to tell you what you will pay to settle.

My experience with Home Depot CC, they will only accept 50% settlement. Most other CC's settle for 30%. Had one client with a BoA CC, by herself last year settled for $1690 on a balance of $10,000.

Good Luck..:)

.

Edited by 2ndTimeAround

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