Hi! Long time lurker, just created an account to post as some may want to follow along to help them on their journey.
This is crazy long and I apologize in advance. Working with both BCU and Discover Home Loans on a HEL and deciding which to do.
I am looking to get a HEL in order to consolidate debt. Yes I know we shouldn't use a home to consolidate unsecured debt. (Long story short, my mom came down with dementia and had to get care quickly. I was left paying for her apartment, bills and care until she could get into a home with medicaid and she had/has zero insurance or assets. )
Anyway- SomeSP:
Home is worth between $299K-$330K and I owe right at $180K.
Income is $108912 documented but also have a large CS amount I'm not counting as my son will be 18 in just under 3 years.
Friend owns a mortgage brokerage and she did have REMN run numbers to see what they could approve on their 5-day HEL but it came back with only a $39K approval.
Here are the two options I'm working with:
Baxter Credit Union: BCU has a valuation of $305K on my home and will do up to 80% CLTV. It's in "final underwriting" and he said it should be final today so that would be the fastest way to close.
Timeline:
Applied for BCU membership through the Life, Money, You site - 11/17/2023
Initial Online app for HEL on 11/20/23
Did phone call with them to go through everything on 11/20 as well
Received rate lock and docusign disclosures: 11/21
All docs requested sent on 11/27- they requested POI, W2s, Paystubs, etc. Also requested VOE from my part time job employer.
Sent to underwriting on 12/1/23
12/4 - They asked for 2 years' of W2s from the second job as they didn't ask for those before, only them main source of income.
*At this point I waited on sending only bc Discover Home Loans was offering 89% CLTV at almost the same rate and I am interested in getting it all paid so I'd prefer that.
12/15- Discover seems to take forever so I finally sent back the other W2s to BCU
12/19- Those docs were sent to final underwriting and I was told I should know today, if not then at most in 24 hours....
PROS: Faster closing, 9% rate vs 10% on Discover
CONS: Smaller amount by $18K and shorter term - 20 years vs Discover's 30 years. Closing costs are about $650 (Tho my budget and plan has me paying it off in less than 10, regardless. )
Discover Home Loans:
Whew not sure where to even start it as it's been a shhhh show from the start. Initially applied and was preapproved for 89% CLTV on 11/21/23
Spoke to loan officer to go over what would be paid off, my DTI, CLTV, etc. All was good and within guidelines as well as scores. Theyn sent initial disclosures.
Uploaded all requested docs same day
11/30/23- they verified that they had all docs and sent to a processor.Valuation was in and good, etc. All things checked out the same as preapproval
12/1/23- Received an email saying my loan was denied and the app closed- I logged on and saw that it said my DTI was too high- which is wasn't as we went through that & I had/have a spreadsheet tracking it all. I called immediately and got a different processor who saw that they were counting a loan to be paid off twice- so once being paid off but still again in the DTI calc. It was done automatically so no person put eyes on it before declining or noticing. Turns out that one bureau listed the whole loan number and the other only the first 6 digits so their sytem thought it was two loans? Weird and clearly the first processor would have noticed that if it were the case.
New processor took my app again over the phone since it was closed and could not be reopened. So another HP. She did note that it was the same loan and manually pulled that payment out as well as the double payment the HEL was to be paying off. (hope this all makes sense!)
She said she could transfer all docs and app info over, but she still asked me all the things and the online system still had me upload them all again.
12/8- again declined for DTI!! Called back immediately once more. Got another processor who said since it just denied, she could have her supervisor override and reopen. She did that and also manually took that loan out again with more notes. Back to approved.
12/13- They asked for more info- random stuff like "explain why you got raises at both your jobs each year"- ummmm bc that's what most employers do???; then "Why do you have another Disc Mortgage Inq?" -ummm bc you messed up the first??
Also had me enter and verify all debts being paid off, the account numbers, payoff quotes, payment addresses, etc. Did all of this same day.
As of today, 12/19- haven't heard anything back but the online portal shows they are in "Phase 2" and reviewing property & mortgage info as well as updating homeowners insurance. Says next step will be final underwriting.
PROS: Pays off all things, longer term, zero closing fees
CONS: Not sure they will actually have their stuff together enough to close it and also how much longer will it all take? I realize that in the grand scheme of things it hasn't taken too long yet (right at a month) but I just don't have my faith in them since they'd messed up twice with the basics already.
I will update as I get info. My thought for now is to go with whomever closes first - likely BCU. Then maybe in a few months refinance it if rates drop and I'll wipe what's left that I haven't paid off already. I'll get another raise from my main employer in March that'll likely be 10% as they're trying to get me to the minimum my peers are at and all extra will go to get this paid off.
Scores: EXP: 662, EQ: 697; 676
DTI with new payments: BCU- 39%; Disc: 40% (I believe both require 43%)
CLTV: BCU would be 80%; Disc would be 87%
