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Help! 7% Interest Rate on Mortgage

Frequent Contributor

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!

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3 REPLIES
Regular Contributor

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.

Message 2 of 4
Moderator Emeritus

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!

June 2017 update: All scores over 820, just pure gardening now.
Message 3 of 4
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Frequent Contributor

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!

Citi Double Cash $16,600 / BofA Cash Rewards Visa Sig $11,000 / Barclaycard Rewards $8,900 / CapOne Platinum $7,450 / BofA BankAmericard Visa $6,500 / eBay MC $5,800 / Discover It $5,000 / Chase Freedom $1,500 / Lowe's $8,500 / JCP MC $6,500 / Walmart $5,000 / Amazon $4,100
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