Hi everyone -
I would like to get your feedback on several goals I'm trying to accomplish using house refinancing.
I come from a recent 2 year history of bad credit due to some business mishap which resulted in me ending up with about $250k in credit card debt on my wife and my names. All of this credit is on a payment plan organized via American Financial and we have managed to get it down to about 30k on my wife's name, and 50k on my name.
On the same note, when we went through this, we purposely protected my wife's credit from late payments, so my wife has no late payments, and I have a slew of them spanning up to 90 days late about two years ago. In short though, we have been paying things off regularly and the current scores about 650 for me, and near 700 for my wife. The negatives we both share are high revolving balance. I additionally share the 2 year old slew of 90 day late payments.
My wife is from latin america and we are looking into solving a need for her parents and our visit there with the purchase of property in her home country. The property we're looking at will need a loan of around 130k and their interest rates for foreigners (her included, locals living abroad) is going to be minimum 8%.
Our home here is worth about 620k. We have 280k 1st mortgage 30 year at 3.75%. We have 25k 2nd mortgage 10 year at 4.75%. The equity in the home is in the 320k range.
I'm looking at the situation and am thinking I can refinance the 2nd mortgage and do better than the 8% I would get in central america, and also bundle the remaining debt into that plan. Here are my questions:
1. Any feedback from any of you on this general plan?
2. Will a bank talk to me with current sub 700 score, or will they take a deeper dive and look at the fact that the majority of the negative score (at least on my wife's side) is caused by high revolving balance which gets solved with a financial restructure.
3. Do banks typically want to restructure both 1st and 2nd mortgage or are they open to just refinance the 2nd. I don't want to lose the favorable 3.75 interst on the 1st mortgage.
We are set on the income side. My wife makes 110k a year, and my business has allowed me to pull income 20-30k each month for the last 6 months with a dip in the off season (Dec/Jan) which is starting to pick up again now.
I know I can wait for a better time, but there are some reasons if I need to do this, I need to execute in the May timeframe. I can always do another refinance or pay off balance at a later date to lower montnly commitment.
Thanks in advance for your thoughts.
Most 2nd mtg lenders want a much higher credit score than your current score - but even if you were to qualify the interest rates that I'm seeing for 2nd mtg's would be much higher than 8% . Closer to 12.5%
Even if you put the 2nd mtg solely in your wife's name so they can utilize her better credit score I'm still seeing rates well above 8% unless someone else can chime in with better offers they've seen
I would leave the 1st mortgage alone and start by asking your current 2nd mtg lender if they'll refi and what their rates are. If they won't, start calling around. I have an option in Texas who has a 20 yr 2nd at 6.75 for 690+ scores.
Thanks I appreciate both responses.
I'm going to go with the advice to leave the first mortgage alone and see if I can do something with the second.