09-01-2012 11:27 PM
Quick question. How stringent are refinancing qualifications? Does it vary from lender to lender or is there some general rule on minimum credit score? I've been in my home for over 6 years at 6.5%. I would love to drop that by even 2% if possible, even with my credit score, which at 543, is buried just below Jimmy Hoffa!!
I'm a state employee and now thinking about joining the state credit union to see if my near decade of tenure could help overcome my poor credit score. Probably the worst thing hurting my score is 7 different 30 day lates on my mortgage, three of them from this year. Now, I'm back to paying my mortgage at the beginning of the month when it's due, instead of the end of the month when I'm right against the 30 day late mark.
Any hope? Thanks in advance for any responses. This site rocks!!!!
09-02-2012 10:26 AM - edited 09-02-2012 10:29 AM
I/we recently did an FHA streamline refinance. But my credit was horrible due to a bankruptcy a couple years ago, bailing out of a mobile home we couldn't even short sale. It was a very bad purchase decision we made over 12 years ago. We lived there and paid my mortgage at a very high interest rate (9.995%) for over eight years until the place was falling apart around us due to poor manufacturing and poor set-up when new. We were young and uninformed when we bought the mobile home as our first home purchase and we should've formed our own opinion due to research on my part. But we listened to others who didn't have our best interest in mind and at the time it seemed like a good decision. It turned out being the worst mistake we've ever made.
So we bailed, but first I knew we had to purchase another home before bailing. We bought a condo we are still in today 4 years ago. We both signed for the mortage on the condo and walked away from the mobile home.. A year later I was forced into bankruptcy due to the mobile home situation. Luckily, I made sure years before only my name was on the mobile home through refinancing, so my wife came out clean. My wife protested at the time of the refinance, but now she attributes that to saving us.
I started researching FHA streamline refinacing 6 months ago. Based upon the FHA guidlines, we could qualify. But then I started learning about the bank overlays and found with my low credit score we didn't stand a chance. So I started looking into doing a streamline refinance removing me as a coborrower. I found a lender willing to try us doing a full credit qualifying FHA streamline refinance since my wife has fabulous credit. It was difficult mainly due to her income, but eventually we got our interest rate reduced from 6.75% to 3.626% and our MIP remained at the 2008 level when we originally purchased the condo. That was due to me doing my homework and delaying the process to keep the reduced MIP.
But long story short. my only options were either bringing my credit or having a good credit coborrower so I could remove myself. Furthermore, since my home was FHA insured, I was able to refinance without an appraisal. So your homes value may be another factor in a refinance.
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