Looking for help with a Re-fi

[Anonymous]

I am hoping for some suggestions from mortgage pros or someone who has had a similar situation.

 These are the facts:

Home should appraise at 2 million + based on recent comps.
I owe $140,00 on the first (5.1% 15-year fixed.)
I owe $206,000 on the HELOC which converts to fixed in 2016.
Insurance and property tax $1,000 monthly
Minimum payments on Lending Club loan, car lease, and credit cards carrying balances combined: $1,600 monthly.

Self-employed with AGI $101,000 for 2014, $90,000 in 2013
My Credit scores approx. 720 across with only one 30 day late 6 1/2 years ago. (I haven't paid for mortgage FICOS yet.)  

21 years of perfect mortage payment history.
Spouse's income is $64,000, but has an open collection (six years old) and a judgment from 4 years ago on her reports. I have been working on her credit, and thanks to  this forum have bumped her FAKO's  80 points in six months , but we seem to have run up against the celing for now.

    My goal is to re-fi both loans into a 30-year fixed if possible to lower the monthly payments.

From my research and your advice I see three possible options:

1) Find a lender who will be flexible on the DTI and try for a conventional loan using my income only.
2) Include the spouse's income and find a lender who will work with her negative credit.
3) A bank statement loan using the cash flow from my primary business of 28 years; sole proprietor, approx. $500,000 gross income yearly. I am a 50% partner in a second business grossing approx. $250,000 yearly.

  Thakns in advance for anyone with constructive input!

[frugalQ]

You are trying to refi 346k on a house that's valued at >2M.

Is AGI used to average 2-yrs salary for self employed? I thought you needed to factor in your business deductions. Your gross may be significantly less if you have not factored in your business deductions.

Is the judgement paid? If so, there would not be a problem with it. I wouldn't pay off the collection unless your lender/underwriter tells you. What are you wife's scores? The two negative items don't seem to be huge hurdle to overcome.

I'm not familiar with bank statement loans or anything like that, but you have left a lot of info out which makes it hard to provide advice. On the surface, it appears that you would be ok. Even if your income avg is around 50k you would still be able to meet DTI requirements with 114k income between the two of you and only 1,600/month in expenses.

[Anonymous]

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@frugalQ wrote:
You are trying to refi 346k on a house that's valued at >2M.

Is AGI used to average 2-yrs salary for self employed? I thought you needed to factor in your business deductions. Your gross may be significantly less if you have not factored in your business deductions.

Is the judgement paid? If so, there would not be a problem with it. I wouldn't pay off the collection unless your lender/underwriter tells you. What are you wife's scores? The two negative items don't seem to be huge hurdle to overcome.

I'm not familiar with bank statement loans or anything like that, but you have left a lot of info out which makes it hard to provide advice. On the surface, it appears that you would be ok. Even if your income avg is around 50k you would still be able to meet DTI requirements with 114k income between the two of you and only 1,600/month in expenses.

Thanks for the reply.

My  income is net of business deductions, that is my actual reported income. Her juudgement is not paid: we just found out about it when we pulled her reports.  Her FAKOs are approx. 590

[frugalQ]

have you looked at your actual mortgage scores from here?  that will help gauge what's the best route for you...her scores may be higher than what you think.  what are the FHA loan limits?  maybe you can refi into an FHA loan where the credit score requirements are not as strict.

i'm sure the judgement will have to be paid no matter what. Can you refi and take some cash out to pay it?  are you allowed to do that as a condition of closing?  kind of like how you can pay a collection at the closing table.

I'm sorry i can't be of more help....good luck and please keep us posted.

[Anonymous]

I haven't pulled the mortgage socres yet;  wainting on the latest tweaked payments and accounts to post...

[StartingOver10]

Honestly with the LTV you are plannning to refi, it won't be an issue if you do the refi in your name only (non-community property state).

Naturally if you are in a community property state, the answer is different because your wife's credit becomes an issue.

How large is this judgment? Is it something that can be Satisfied before the refi? Or do you need funds from the refi to pay it?

[Anonymous]

We are in a community property state, but her name is not on the deed or current loans. We just found out about the judgement for $3,200 (she was never served,) and could pay it from the refi if that is a possibility.

[StartingOver10]

PM Shanethemortgageman, he will let you know how paying off a judgment works at the time of refi in a community  property state. I'm sure there is a way to get it done right on the HUD1 and have the title co/attorney pay it.

However, word of warning: if you do it that way, the judgment holder is not negotiable on the payoff (usually). If you negotiate before you do a lender pull you stand a much better chance of getting the amount reduced. Remember there is statutory interest added to the face amount of the judgment so it may be much higher than the $3200 (assuming this is the face value).