I'd like to refinance my condo to lower my rate and pull out $20,000 in equity for home improvements but I'm wondering if it's even worth starting the process at this time.
I bought my condo in 11/98 with an FHA loan at 6.25% interest. In 2000 I took out a second mortgage for $15,000. The condo is currently valued at $159,000. My 1st mortgage balance is $76,000 and my 2nd mortgage balance is $10,000, so I have a decent amount of equity.
In 9/04, due to job loss, I filed for Ch 13. This was discharged after 5 years and fell off my credit report last year. In 2007, while still in Ch 13, I received notice of a judgement against me for a student loan in the amount of $8000 (the loan was listed in my Ch 13 but student loans aren't eligible for discharge).
Currently, my EQ score is 587 and my TU score is 648. I'm guessing my EQ score is lower because they weight credit util heavier than TU does. I have no late payments on either report but I do have 4 unpaid collections totaling about $750 for medical bills from a surgery 3 years ago. 3 are 2 years old and 1 is a little over a year. I also have a paid collection for $153 from 2 years ago.
I guess I'm wondering if my equity + lack of late payments + good DTI (27% for all debts inc. mortgages) make up for the lower scores and collections. Or if I should wait awhile (6-12 months) before attempting to refi. Any help or advice is appreciated. Thanks!
