On-track for refinance?

[Anonymous]

I am in the process of rebuilding my credit score in hopefully one year's time so I can refinance my 2-year ARM mortgage in August of '08.  My EQ score is currently 480.  I have about $3K in medical collections that I will have paid and deleted from my report in November of this year. 

I will have all of my "bad debt" (credit cards, loans, etc) paid off by May of '08 and will only have one student loan ($11K) and my mortgage ($70K) left.  I would like to refinance into a 30-year fixed and was told that my score would at least need to be 620 in order to do so (assuming also that I have enough equity).

I know it's hard to say, but should I be on-track for hitting that 620 mark in August of '08 considering my medical collections will be deleted and all bad debts will be paid off?

Has anyone else gained 140+ points in a year's time or is that even realistic?

[Anonymous]

I was at 480- in November -
All 3 over 630 now.

What is your payment history on the current mortgage?
When was your last late payment?

[Anonymous]

Oh, that's great to hear! I have only had one 30-day late payment in November of 2006, otherwise current. But I know those late payments on mortgages bring your score down quite a bit! But seeing that you have raised yours quite quickly is encouraging even though I know everyone has different circumstances on their credit report.

[Anonymous]

I was asking about mortgage lates as FHA may be able to help if you can't get the scores up in time.

I think rates will bottom out the end of Sept/mid Oct and then start creeping up.

What is the rate on your ARM? Do you have a pre-payment penalty?

Have you sent a GW letter for that late payment?

[Anonymous]

No, haven't sent the goodwill letter, but I will, that's a great idea.  My interest rate on my ARM is already 9.25%, I believe when it resets next August the percentage goes up to approx. 11.58% -yikes.  I think the cap is like 6 points or something crazy like that and it resets every 6 months.  And yes, I do have a prepayment penalty that also expires next year.

FHA is a great idea, as well as the GW letter - thanks!