topic Re: Help w/ 10yr Refi in Mortgage Loans

Help w/ 10yr Refi

0errant — Mon, 18 May 2015 17:07:10 GMT

Hi all,

Looking for advice on getting a 10 year refi on our current home. I don't need cash out, just want to get this thing paid off so I can retire one day! We bought the house about 4 years ago, mortgage in my name only (fiance's credit sucked from divorce a couple of years prior). We had been working on getting his credit cleaned up, so I contacted my current lender (Colonial Savings through my CU) about doing the 10 year. It turns out his credit still sucks, apparently he recently co-signed on a car for one of his kids In order to do anything, it would need to be in my name only again, but they said the new 10yr loan would put my DTI to high.

Here are some numbers:

My 2014 Wages: $54K

Current loan principal: $94K @ 5% int with $1065 PTI payment

Will appraise $200K+ easily

Student loan: $40K with $336 payment (will be forgiven in 2017 via PSLF)

Car loan: $7K with $342 payment

Discover: $1500 with $50 or less payment (I've been paying it down, so not sure what the actual payment reports as)

Scores:

Discover says 814

Equifax Risk Score: 788

Experian Fico 8: 819

TranUnion Vantage Score: 849

I have no negatives on any of the three credit reports and show two succesfully paid off mortgages. I've worked for the same employer for 14 years. I have two Visa's from Chase and a Home Depot card, all with zero balances. I was told on my previous refi attempt that my score put me in top teir rates, but that my DTI was too high to cover the payment on a 10 year loan.

We have the funds to pay off my car and Discover. Is that enough to get my DTI down enough to qualify for a 10 year refi on the $94k I currently owe? If you think so, how long should I wait after paying them off to apply? How much reserve cash should I have? Anything else I can do to increase my chances of getting qualified? Should I use a different lender? Anything else you need from me in order to help?

Thanks for any help/advice you can offer!

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 18:21:27 GMT

@0errant wrote:
Hi all,

Looking for advice on getting a 10 year refi on our current home. I don't need cash out, just want to get this thing paid off so I can retire one day! We bought the house about 4 years ago, mortgage in my name only (fiance's credit sucked from divorce a couple of years prior). We had been working on getting his credit cleaned up, so I contacted my current lender (Colonial Savings through my CU) about doing the 10 year. It turns out his credit still sucks, apparently he recently co-signed on a car for one of his kids In order to do anything, it would need to be in my name only again, but they said the new 10yr loan would put my DTI to high.

Here are some numbers:

My 2014 Wages: $54K
@Current loan principal: $94K @ 5% int with $1065 PTI payment
Will appraise $200K+ easily
Student loan: $40K with $336 payment (will be forgiven in 2017 via PSLF)
Car loan: $7K with $342 payment
Discover: $1500 with $50 or less payment (I've been paying it down, so not sure what the actual payment reports as)

Scores:

Discover says 814
Equifax Risk Score: 788
Experian Fico 8: 819
TranUnion Vantage Score: 849

I have no negatives on any of the three credit reports and show two succesfully paid off mortgages. I've worked for the same employer for 14 years. I have two Visa's from Chase and a Home Depot card, all with zero balances. I was told on my previous refi attempt that my score put me in top teir rates, but that my DTI was too high to cover the payment on a 10 year loan.

We have the funds to pay off my car and Discover. Is that enough to get my DTI down enough to qualify for a 10 year refi on the $94k I currently owe? If you think so, how long should I wait after paying them off to apply? How much reserve cash should I have? Anything else I can do to increase my chances of getting qualified? Should I use a different lender? Anything else you need from me in order to help?

Thanks for any help/advice you can offer!

@Your gross monthly income is $4500. A 10 year $94k loan @ 3% is likely to give you a PITI around $1200. 1200 + 336 student loan + 342 car + 50 Discover puts your overall DTI at 42.8%.

That's not extremely high. I'd ask your lender for specific feedback regarding your personal DTI situation.

To reduce your DTI, you could refinance your car to reduce your debt by $200 a month, or go for a 15 year mortgage for $250 a month less.

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 18:25:30 GMT

Thanks, dpeezy, but my plan was to pay off car and Discover. I can do that in the next couple of weeks. I'm hoping that brings it down enough. How long should I wait after paying them off to apply, and will paying them off hurt my score?

Ooh and just noticed my sig line is really old. I should update!

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 18:34:38 GMT

If you pay off your car, you should easily qualify with regard to DTI. I'd give it a couple weeks after you pay it off so that your credit reports have time to update.

If you have another installment loan (which you do), paying off the car shouldn't negatively impact your credit score much if at all.

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 18:36:58 GMT

Thank you!

Will the bank want to see reserves on a refi?

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 18:50:29 GMT

With your credit score and equity, they shouldn't, unless they have extremely tight overlays.

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 21:21:19 GMT

And do you think going with my same lender is a good idea? On the one hand, they know I'm reliable. But the other hand, they would be losing money in interest payments, right?

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 21:29:27 GMT

If you are happy with your lender, I would say yes. It truly depends on the quality of service you received the first time around.

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 21:34:14 GMT

I am very happy with them, so I will just stay put. I really wish I had been able to get approved before, when rates were lower for a better payment, but I'll still be saving money

Is there anything else I should be doing to get the best rate?

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 21:45:41 GMT

With your scores, it sounds like you will be best off with a conventional loan (unless you are a veteran by chance). As far as rate - how long will you be staying in this particular home? If 8-10+ years, you may consider buying your rate down as that will save you money over time. If it is a very short-term living situation, you may even consider taking a slightly higher rate to cover closing costs.

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 21:57:13 GMT

Nope, I won't qualify for a VA. I do plan on being in this house at least as long as the 10 years loan, but paying off the car and credit card will leave me without any savings. I think I'll probably just have to go with whatever rate will get me in with the least amount of out of pocket cash

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 21:58:59 GMT

Well, at least you are avoiding paying extra interest in some fashion .

Re: Help w/ 10yr Refi

0errant — Mon, 18 May 2015 22:06:42 GMT

Yep, that's what I was thinking! Of course, I would like to keep the payment as low as possible, but at least I know it will be in a range where I can pay it with my own salary should I somehow end up on my own. I'd be maxed out DTI-wise and unable to finance anything else for another 10 years, though.

Thank you so much for all of your help, dpeezy. For some reason, these things always make me really nervous, but you've set my mind at ease

Re: Help w/ 10yr Refi

Anonymous — Mon, 18 May 2015 22:26:46 GMT

@0errant wrote:
Yep, that's what I was thinking! Of course, I would like to keep the payment as low as possible, but at least I know it will be in a range where I can pay it with my own salary should I somehow end up on my own. I'd be maxed out DTI-wise and unable to finance anything else for another 10 years, though.

Thank you so much for all of your help, dpeezy. For some reason, these things always make me really nervous, but you've set my mind at ease

Not a problem - happy to help!