Refi w/ 30-day (credit card) late?

[Simmoja3]

Hey everyone,

Want (need) to refi in the next few months, but afraid I've got an instant non-starter.  Had two 30-day lates last November - stupid situation, two accounts with the same lender.  Really have no basis for a dispute, though I've sent goodwill letter and will try disputing as well.  Based on everything I've heard about the lender (NFCU), I'm probably not going to be able to make them go away.

Does having these lates so recent instantly kill my chances of getting a refi?  Not looking for FHA, but it would be a jumbo loan.  Otherwise I think my stats are reasonable - ratios will be good 26/32, LTV 78%, mid-FICO 684.  Mortgage is two years old with no lates.  Have one additional late 13 months ago, and otherwise nothing negative for the last 5 years.

[edcampbell613]

If that is all and with a good letter of explanation you will have no problem.

Its the installment loan lates that the lenders usually have a problem with.

When writing your letter don't say "Went to Vegas, put it all on black"

LOL

[BrianB_The_Loan_Professor]

2 x 30 in the last 12 months is going to require that everything else in the file be strong. The income and debt ratio, the employment history, any reserves will help....all things considered it is possible but it does require a stronger loan application to get past the lates.

Brian

[Simmoja3]

Ok thanks.  Will continue working hard to get them removed but don't feel very confident.  Is there any value in letting them get to the 6 month mark, or is anything under a year pretty much all the same?

How important are reserves in a refi?  I was going to take the cash I have/will have and pay off another debt before applying, but my income/DTI is fine either way so I can afford to keep it on if having good reserves would be better than lower ratios.  Also, the end result of the refi (even with some cash out) would be a lower monthly payment, which I believe helps the process.

[Simmoja3]

Brian (and others!) one more question for ya - if this will be a cash-out refi (LTV still 78% after), could the cash-out piece be considered "reserves"?  Asking because a decision I need to make between now and closing is whether to save up 3 months of reserves OR pay off an IRS installment agreement (in good standing with over a year on-time payments).  If I DON'T pay down the IRS bill, I would have the reserves and use the proceeds from the cash-out to pay it off (among other things); if I DO pay the IRS bill, I wouldn't have much in the way of reserves (basically one month PITI) but that debt would be completely taken care of.

Regarding using cash-out as reserves, with the amount I'm requesting I would comfortably have six months of reserves after closing.