Refinancing to improve credit rating?

Anonymous · ‎04-16-2007

Hello All:

I'm new here and looking forward to some great information.

I am trying to improve my credit rating, but my main question to all of you who are experienced in these matters is this... we are about to refinance our home, so should we get an interest only loan or an ARM loan to keep low payments? We want low payments so we can be certain we will be able to make these payments for the 2 year term of this ARM and then refinance again later as our credit rating will then hopefully be improved.

The loan we are being offered now is at a higher interest rate due to our lower credit rating. Does this sound like we are doing the right thing? We need to refinance and get rid of our second mortgage. This will also reduce our payment each month.

Any thoughts?

Thank you for your help! :-)

Message Edited by Lee_6063 on 04-16-2007 01:14 PM

Anonymous · ‎04-16-2007

Lee_6063 wrote:
Hello All:

I'm new here and looking forward to some great information.

I am trying to improve my credit rating, but my main question to all of you who are experienced in these matters is this... we are about to refinance our home, so should we get an interest only loan or an ARM loan to keep low payments? We want low payments so we can be certain we will be able to make these payments for the 2 year term of this ARM and then refinance again later as our credit rating will then hopefully be improved.

The loan we are being offered now is at a higher interest rate due to our lower credit rating. Does this sound like we are doing the right thing? We need to refinance and get rid of our second mortgage. This will also reduce our payment each month.

Any thoughts?

Thank you for your help! :-)

Message Edited by Lee_6063 on 04-16-2007 01:14 PM

An ARM is like playing the slots, you are betting that the interest rates will not go up. Do you know something the rest of us don't. The ARM ortgage if the reason so many homes are being foreclosed on today. They got in at low rates and the minute the FED started going up, they could no longer afford the houses they purchased

Anonymous · ‎04-17-2007

what state are you in? What type of debts are you looking to pay off? How long do you plan to stay in the new loan?

Anonymous · ‎04-17-2007

I guess we need to take the gamble. We want to stay in this house for at least a few more years and we definitely need to get this payment down. Getting the payment down will help ensure that we make all the payments on time for the next two to three years and then we'll look into a refinance with hopefully a lot better credit rating.

thanks

Anonymous · ‎04-17-2007

Hi echiffrillerr:

We live in Northern California. We'll stay in this home for at least two to three more years, then we'll deside if we'll stay here when my spouse retires around that time. Our main idea is to get this payment as low as possible so we can make sure every single payment is on time. We really need to get this credit rating FICO score up so we can later get a better rate for a mortagage loan. We have a 1st and 2nd mortgage (2nd mortgage is a line of credit home equity). WE have a lot of equity in this home so I think we'll be okay if homes go way down in price in the next couple years. If we have an emergency when this ARM matures and we can't pay the higher payment or get out of the loan somehow, I guess we could get a second again and make due until we CAN refinance. But, the objective is to refinance after a two year ARM, or even an interest only loan, so we can settle on a lower interest rate (since our credit will be better). Hope that makes sense. Any thoughts??? Thanks so much!

Lee