Equity Line of Credit Dissapointment

[sylviagarcia]

So  I filed my BK in 2014 and it was discharged...

I wanted to get an equity line of credit as soon as I rebuilt my credit in order to make some very needed home improvements and after several attempts of this I finally found out that I CAN'T obtain one because I have a silent subordinate note that HUD has on my home when I did a modification years ago to lower my payment.. I didn't ask for this to be done that way but being that I had an FHA that was how my mortgage company did it... Because my mortgage payment was lowered I couldn't oppose but now I guess they're telling me that I have to refinance my entire home's mortgage to remove that silent subordinate note and then consider applying for a HELOC..   I was told that no bank or financial institution will want to be 2nd in place and therefore I wouldn't get anyone to give me a HELOC.

So now my hands are tight because as far as I'm concerned I have to wait 2yrs Post BK D/C to be able to refinance and being that interest rates are going to be higher -- or the finacial spec keep threatening with highering the interest it means I'll probably end up with a higher interest rate on my loan

Anyone have any similar experience they can share with me? or any feedback,  recommendations..etc..??

Thanks so much.

[hpotterfan77]

Hi there and welcome to the forum.  I happen to be a mortgage underwriter.  This is not as uncommon as you think however you will have to wait a good couple of years before you can refi.  Most banks/lenders are score driven and will require at least between a 640 and 680 score to refi but they want to see at least 3-4 years post discharge.  I do not know what your current rate is on your mortgage but I wouldn't be worried about rates being too much higher than they are now.  Our economy is slowing right now so the fed would have to be insane to raise them anytime soon.  I know this isn't what you wanted to hear and guidelines may change over the next year as they seem to be getting more LENIENT on credit again.

[sylviagarcia]

hpotterfan77:

Wow!! thanks so much for the reply... and althoujgh its not exactly what I want to hear you have given me hope as to the interest rate - God willing - don't go up much higher.. My current rate is 3.725% and I am not paying MIP anymore...

I do have a decent score considering my BK (appx. 676 depending on ea. CB) but I think the wait is what kills me   You mentioned 3-4 yrs and I had previously heard I'd be able to refi in 2 yrs post discharge... so I hope it doesn't take me that long..

Either way, your input is greatly appreciated and refreshing to some point.

Have a wonderful day

[hpotterfan77]

You're very welcome.  It MIGHT be possible 2 years post but the rates are generally higher due to the fact that the lenders willing to do 2 yrs post discharge are generally more "subprime" and you will probably end up with a higher rate.

[sylviagarcia]

OOhhh Ok.. I understand.. I don't want that (primerate loan) so I'll wait longer... :/

Thanks again for everything.