Reply
Frequent Contributor
Posts: 375
Registered: ‎01-20-2012
0

Help! 7% Interest Rate on Mortgage

So I just found out my best friend's mortgage interest rate is 7% on his house. From what I understand, mortgage rates are considerably lower than this rate right now, even for those with scores that just barely qualify for a mortgage. His credit is in the TANK--I'm talking low 500s across the board which, if I'm not mistaken, means he couldn't qualify for a new mortgage at this point since--from what I've read--a 620 middle score is needed at the least.

 

He owes between $88-89,000 on the mortgage right now and his house was last appraised at $190,000 several years ago, from what he's said. I checked Zillow and they estimate his home's worth at $170,000. I know Zillow isn't the end-all be-all in home appraisals, but I have heard that Zillow trends on the low side of home value.

 

Is there anything at all he can do to get a lower interest rate on his house? 7% just seems like it's through the roof but he's still paying for past mistakes that won't fall off his report for another couple of years. Does he need to have a mid-score around 620 to refinance? Does he have any options at all with credit scores as low as his? Any advice is welcome, it just seems to me that he's sinking hundreds of extra dollars a month into the interest payment for his house because of this rate. If he's got to live with it then so be it, but if there's anything he can do to save some $$ then that would be the better option!

Current: EQ 673 September2013 / TU 696 September2013 (Walmart)
Start: EQ 584 Feb2012 / TU 629 July2012

Wallet: BofA Cash Rewards Visa Sig $5000 / Lowe's $6000 / JCP $3900 / eBay MC $3200 / Barclaycard Rewards $2000 / Walmart $3300 / CapOne NHRC $2000 / CapOne Platinum #1 $2000 / Amazon $1700 / Discover It $1000 / CapOne Platinum #2 (former Orchard) $750 / Amex Zync $500 Autopay
Regular Contributor
Posts: 226
Registered: ‎05-24-2012
0

Re: Help! 7% Interest Rate on Mortgage

Your friend can look into doing a streamline refinince. You have no credit check on a streamline. Google streamline refinince and you will get a bunch of info on how  they work.

Moderator
Posts: 13,876
Registered: ‎04-15-2011
0

Re: Help! 7% Interest Rate on Mortgage


atarvuzdar wrote:

So I just found out my best friend's mortgage interest rate is 7% on his house. From what I understand, mortgage rates are considerably lower than this rate right now, even for those with scores that just barely qualify for a mortgage. His credit is in the TANK--I'm talking low 500s across the board which, if I'm not mistaken, means he couldn't qualify for a new mortgage at this point since--from what I've read--a 620 middle score is needed at the least.

 

He owes between $88-89,000 on the mortgage right now and his house was last appraised at $190,000 several years ago, from what he's said. I checked Zillow and they estimate his home's worth at $170,000. I know Zillow isn't the end-all be-all in home appraisals, but I have heard that Zillow trends on the low side of home value.

 

Is there anything at all he can do to get a lower interest rate on his house? 7% just seems like it's through the roof but he's still paying for past mistakes that won't fall off his report for another couple of years. Does he need to have a mid-score around 620 to refinance? Does he have any options at all with credit scores as low as his? Any advice is welcome, it just seems to me that he's sinking hundreds of extra dollars a month into the interest payment for his house because of this rate. If he's got to live with it then so be it, but if there's anything he can do to save some $$ then that would be the better option!


With the scores where they are I wouldn't think this would be the opportune time to try for refinancing.  He should start the credit rebuilding process to get his scores in a better position to refinance and save some money.  It might take a little time but could definitely be worth it.

 



Starting Score: 504




July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!
Frequent Contributor
Posts: 375
Registered: ‎01-20-2012
0

Re: Help! 7% Interest Rate on Mortgage

Thanks for the responses. I checked out streamline refinance and it looks like that's applicable to FHA loans which didn't apply to my friend's situation--but it looks like it would've been perfect for his situation otherwise.

 

Thanks again!

Current: EQ 673 September2013 / TU 696 September2013 (Walmart)
Start: EQ 584 Feb2012 / TU 629 July2012

Wallet: BofA Cash Rewards Visa Sig $5000 / Lowe's $6000 / JCP $3900 / eBay MC $3200 / Barclaycard Rewards $2000 / Walmart $3300 / CapOne NHRC $2000 / CapOne Platinum #1 $2000 / Amazon $1700 / Discover It $1000 / CapOne Platinum #2 (former Orchard) $750 / Amex Zync $500 Autopay
Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.