Shane/Dallas/Brian: New Cash Out Refi?

[happy0510]

DISCLAIMER to my fellow FICO Members: I am not looking for comments or advice on the handling of my finances.  Thank you!

Hello! 

Thanks to this forum (Shane,Dallas, & Brian -thank you!) back in Dec of 2010 I purchased my 1st home for 387K in So Cal.

A house sold down the street with similar square footage and one less bedroom for 499K last month. I think a safe number is 475K.

Anyway, my Husband and I racked up some CC debt.  We have paid off a lot and continue to do so, but know we can save hundreds with a refi, HELOC or whatever is out there.  FYI, we plan on staying in our house forever as of today. We are looking for approx 20K but 15K would really do the job.

Our current rate is 4.35% FHA Mortgage. We owe 360K. Our MIP is $160/Mo. P&I $1,907.

Since we are first timers and have never re-financed, we are looking to see if we have a chance.

Here are the baddies I think will come into play:

• Husband has a recent Verizon Account that shows as paid collection in Jan 14. This one is confusing to me however since it is a utility and there are no collections in the collection section!
• I have a paid for less than full balance for an AMEX in Jan 14 as well.
• Husband has an open lien on TU for $135 or so? This is the only unpaid baddie.
• All other accounts (30 or so between us both) are on time with no negatives.

My lowest FICO is a 657 and highest at 685ish.

My husbands lowest is a 675 and highest 710ish.

FICO simulator pushes us to over 750s after CCs are paid off.

We make 120K a year between the both of us.

We have about 30K in assets aside from our equity.

Monthly Payments:

My lease is up in March 2015. $325 Mo.

Husband owes 6K on his car with 18 mos left at $350 Mo. Valued at 15K

Personal Loan with CU 12K balance: $328/Mo (we do not need to include this since we hardly notice the bi-weekly auto pmt)

CCs about $700 Mo now.

Property Taxes were $4,700 last year (we want this rolled in)

Homeowners Ins $75.00/Mo (we also want this rolled in)

Let me know your thoughts!!

Happy

[ShanetheMortgageMan]

It appears you have 20% equity now, so it'd be nice if you could refinance and ditch the PMI.  If you refinance into another FHA loan to take cash out, you'd be at $390+/mo in MI.  Conventional can do cash out to 85% LTV, but with your scores your interest rate will really suffer.  Best plan could be to take out a home equity loan to consolidate your credit card debt, because #1 the closing costs on a home equity loan are very inexpensive (usually no more than a few hundred dollars) and #2 paying off the credit card debt will boost your scores.  Then you could refinance your existing 1st mortgage into a conventional mortgage at better interest rates.

Another route could be to use your liquid assets to pay off the credit card debt, refinance the 1st mortgage at better interest rates, then take out a 2nd mortgage afterwards to replenish your assets... or even just do a 1st mortgage cash out refinance to 80% LTV so you can avoid PMI, then wouldn't have to deal with a 2nd mortgage.

[happy0510]

Thanks Shane!

We bit the bullet and so far the lender is hopeful.  It will just all depend on the appraisal.  The lender said my mid score was low so we did suffer with 5.25%.

However, after we pay all that off, and wait 180 days, the lender says to try again in the mid 750s.

Our estimated payment will drop by $100 and that includes paying everything off which is really nice.  We are going to save approx 1K per month.

If it doesn't go through, we are going to pay everything off as you mentioned, then try again after the scores jump.

Also, my husband was just offered a new job and will be taking it.  He was told just to have an offer letter ready to go.  Do you agree this will ok?

[ShanetheMortgageMan]

He'll likely need to have started the job, and even receive a paystub, before you could close.

[happy0510]

Sounds good, thanks! It is weekly pay so if that's the only thing we would need to wait on, it won't be too bad!

[ShanetheMortgageMan]

Each lenders requirements vary, so definitely ask your LO what they will require.  Some will require a paystub showing he's been paid for 30 days, so that wouldn't be until he's been there for 5 weeks.

[happy0510]

Ok, I will follow up and let you know what the outcome is! We applied and locked on Monday and are waiting on disclosures.

[happy0510]

Received and signed disclosures yesterday. Received conditional approval and turned in those conditions.  The appraiser is coming out on Monday but wanted to come sooner.

This is moving very fast for us.