Trying to Refi 1st & 2nd (Cash-out) and My Middle Score Not Quite High Enough?

[Anonymous]

Hoping one of the mortgage gurus on here can help.  We have a first mortgage with GMAC (3.875% 15 years fixed) so ordinarily we wouldn't really be thinking about refinancing that, but we also have a HELOC at a fixed 6% (until 4/14), then the HELOC goes variable.  Would like to wrap both of these together into one first mortgage (as long as rates are so low right now).  Still a 15 year.  Just paid off a bunch of my smaller credit cards as my score is the lower of DH and mine (so lender will base this on my middle score, which right now is about 680).  DTI is fine ... did all the math on that.  Went through pretty much everything with our credit union (who holds our HELOC--as I was getting quick answers and it would have been a good deal).  We even talked about the potential for PMI IF we don't appraise at 80% LTV (my best guess is we'll be very close).  If we're over 80% it may be between 81% and 83%).  Obviously that requires PMI.  But then she finally told me if we required PMI, my middle score has to be at least 700.  Well my scores are not moving a ton now (even though I've paid off about 5 credit cards).  Haven't pulled my FICO (EQ) since 9/20. 

Any other options here?  Another lender I talked to mentioned "lender paid PMI" and I understand the concept, but couldn't get him to call me back (so that's not someone I want to work with).  I also get with that type of PMI you can't cancel it once you get under 80% (or 78%) LTV.

Perhaps our best bet is just to wait another few months until my scores really are at 700 just in case (and maybe best case we won't need PMI at all).  We are currently paying down about $1610/month in principal between the two mortgages, so the balances are coming down nicely which helps too.

Any advice is appreciated!!

[Anonymous]

Just an update as I haven't received any answers.  Think our original strategy of just waiting for my scores to be at or near 700 is best.

Just pulled my EQ score on MY FICO today and it jumped 13 points in the last 3 weeks (just by paying off one CC and paying down a couple of others by $100 each).  It's up to 691, so not much further for me to reach 700.

And when our mortgage lender pulled EQ and TU on 6/7, I was at 674 for both, so depending on date pulled, they should be similar.  EX is always mine and DH's lowest scores, for whatever reason (used to be my highest as it has the highest amount of good tradelines, so go figure)!

Anyways, I really did not expect to see that big of a jump in my score since I purchased it on 9/20.  We're close!

[JM-AM]

I see no reason you would be denied from a score standpoint. You can wait and deal with them once reach 700 score or try another lender. 

My opinion would be to speak with another lender or mortgage broker and see what they tell you. You do not have to give them all your information for general information and their opinion. Brokers should know just from your verbal information if your scores would be an issue. 

Good luck with your decision...

[Anonymous]

Thanks for the answer.

I know our scores are not the problem here (particularly now that my EQ is 691), it's the fact that our house may not appraise at 80% LTV.  Given that this is a "cash-out" refinance, I've already spoken with a couple of lenders.  One told me they could NOT do PMI at all if we did not have 80% LTV.  Our credit union WILL do PMI, but only if my middle score is at least 700 (that's why I was writing to begin with).

Another lender I called told me the same thing (700 middle score to get PMI).

And as I said, doing "lender paid PMI" doesn't seem to make sense in our case because we should be close to 80%.  Our tax bill from 2011 (last year) gave our fair market value as $398,000 (it went up $5K from the year before, even though our taxes went down by about $150).  Then we added a $40K basement remodel (rec room, bedroom with egress window and huge luxury bathroom last fall.  This addition is NOT factored into our taxes yet (meaning we have not been reassessed for tax purposes yet).  We will be at some point, because we did pull permits and work with the building inspector for our remodel.

We're hoping this will add $15 to $20K value to the house.  Need the house to appraise around $405,000.  But we are in a somewhat rural area so it's hard to get comparables as not alot is selling around us (very nice houses around us, but not much moving).  No foreclosures our short sales thankfully.

I still have 2 CC's not reporting at a $0 balance (even though they've been paid off), so hopefully those will also bump up our scores.