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Point.com (anyone used?) vs. FHA refi vs. HELOC

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Simmoja3
Member

Point.com (anyone used?) vs. FHA refi vs. HELOC

Hey all,

 

Posted a couple months ago on the topic of getting a HELOC/home equity loan, and based on the feedback sounds like my chances are slim. Basic info:

 

- LTV is 72, currently a FHA 5/1 at 2.875 (just started year 3)

- FICOs all around 660; CCs (5 of them) pretty much maxed out; other then that only baddies are 2 x 30 from 4 years ago, before maxing out the cards FICO was 710-720

- Current DTI (with those CCs and a personal loan) is 49%; income is pretty good relative to total debt 

 

Basically the payments on the cards and the personal loan are killers -- high util has tanked my score, and the interest on all this means it's gonna take forever to bring the balances down to a meaningful level. 

 

So the options I'm exploring are:

 

1. First choice would be a HELOC or home equity loan. A 90% HELOC would let me pay down everything, take DTI down to about 35%, help get my scores back up in the 700s, and significantly help monthly cash flow. But the general consensus is my scores won't allow it. 

 

1a. My understanding -- maybe someone can confirm? -- is that an 80% CLTV home equity loan MIGHT be possible with my scores (652/664/669). That would let me pay down about 50% of the CC and personal loan debt and take DTI to around 41-42%. One thought was to basically bootstrap my way to the full HELOC I need... start with a smaller home equity loan to 80%, use that to get util down and scores up, then refinance it into the 90% in several months. Any thoughts on if this might work?

 

2. CAsh-out refi into a fixed FHA loan at 85% CLTV. That would let me pay down about 75% of my other debts, and at that point I'll free up enough cash each month to pay down the rest over about a year. With my scores and report, I feel that the approval on the FHA would be relatively easy, just sucks paying the UFMIP and MIP given that I now actually have decent equity in the house. 

 

3. Has anyone used (or explored) point.com? From what I can tell getting to 80% LTV is not a terribly hard approval process, and has the benefit of basically letting me do (1A) above, possibly easier approval than trying to do a home equity loan with my scores. Don't know exactly how a refi would work after that though, since the plan would still be to do a refi, pay off point, and pay down the rest of my balances. 

 

Any insight or thoughts would be most welcome! Getting close to pulling the trigger and trying SOMETHING in the next 2-4 weeks, but keep going around in circles on the best option. 

 

Also so fully aware of the general adice against converting unsecured debt to secured. I've thought about that pretty hard, and feel comfortable that in my circumstance it's the right choice!

 

thanks for any thoughts you might have!

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StartingOver10
Moderator Emerita

Re: Point.com (anyone used?) vs. FHA refi vs. HELOC

Check into a CU in your area for a HELOC - or a straight second mortgage to pay off your debt.  An alternate to a CU would be a small regional bank in your area. Many of the small regional banks are limited to one or maybe two counties and they operate more like CU's than the big box banks (their guidelines are a little more loose).  You might be better off asking for the second - as opposed to the HELOC.  You can designate that the proceeds of the second mortgage will be used to pay of debt - at closing. Once you are in a better financial position, after you have paid off your debt, then consider refinancing down the road with a HELOC. 

 

I just reviewed the website of Point.com to see what it is about and I'm not impressed. It gives no specific information as to costs. Personally, I don't like the idea of selling off bits and pieces of my home to pay down debt - especially when the terms and conditions and costs are not transparent right up front. When a company is reluctant to post the cost, it usually means the cost is high - IME.

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