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What are my options (refi)

New Member

What are my options (refi)

I have read through much of the information here over the last 7 months and it has been very helpful to me (starting credit score 585, now 624). Always had a credit score in the 700's but had some bad luck and through paying lender's late multiple times brought my score down significantly.   I now have a question that you guys may be able to help me with.  I hope to either refinance or modify our currect loan to a 30-year fixed loan with a lower interest rate. Here are the details;


-Bought home 2.5 years ago for $144k

-Only have 1st mortgage (5yr fixed then adjustable) at 9%=$1120 (P and I only) p/ month with current balance of $143k.

-I pay a total of $266 additional for taxes, insurance, homeowner dues per month making my "mortgage" amount $1386+/-

-After working hard on paying our debt for the past 3 years we have no credit card debt.

-We have an auto loan at $480 (obtained last year to lower our previous car payment) and a loan with our bank at $290 p/m (paid down to 26% of origional amount) as our only debt outside of our mortgage.

-Have 1 late mortgage payment showing for July 08 but have been on time since.

-I just checked my score and it has finally raised to 624; my husbands is a little higher (mid-scores)

-I have a stable job bringing in $2000 gross p/m plus bonuses sporatically.  My husband was laid of 2 months ago and now finally has unemployment at +/-$1300 p/m.

-I have also worked a part time job for the last year+ to help out.

-We have tried to get our loan modified by CW since Jan. 09 but they say we don't "qualify", we never even get the chance to submit any paper work or have received a "mod. package".


My question;

I don't want to hurt our score or financial future after having worked so hard the last couple years. With my Husband being laid off I am affraid of falling behind on bills.   


Since CW won't modify our loan after multiple attemps to speak with them should we do a standard refi.  Now that our mid-score is over 620 should we do an FHA refi? Or wait till July to get a total of 12 months of "on time" mortgage payments before we make an attempt at a standard refi?


I would love to modify the loan as I think we match the "typical" eligible person especially now that my husband is laid off.  I also cringe at the thought of the high fees associated with FHA refi and having to add them to the balance of our loan, but will if that is our best option.


And the last question, I am thinking of paying of the loan with the bank ($3100) in the next two month with bonuses to add $290 back into our monthly budget.  However, this would leave us with only 2 active accounts showing on our credit report and am not sure if it will hurt us when getting a loan.


Any advise would be appreciated.  I tried to keep it short and thanks in advance for your response...

Message 1 of 9
Moderator Emeritus

Re: What are my options (refi)

You mentioned that you inquired about a modification in January.  That was before the Making Home Affordable plan was in place.  Have you asked about whether you qualify for either a Home Affordable Refinance or Modification since the government plan was put in place a couple months ago?


What is the estimated market value of your home?


Rates for the Home Affordable Refinance are based on current market rates, and rates on the modification option can be even lower, so there is definitely room for improvement.  Since the goal is to get your PITI down to 31% of your gross - and the lender may use the unemployment income in its calculation - you don't have as much of a hurdle to clear.  Your current PITI is at 42%, and the 31% goal would be achieved by cutting your payments by $300, which could be accomplished through a modest reduction in interest rate to about 5.5% with the balance re-amortized over 30 years.

Message 2 of 9
New Member

Re: What are my options (refi)

Lel, thanks for the response.  We initially tried to modify in January and got the run around.  We then waited a couple months and I have called CW over the last 2 months.  Each time they tell me that they don't know exactly how the new government plan will work and for me to call back or wait for a letter. 


I last spoke with them a few days ago and the individual told me that we didn't qualify.  He only asked me what our income was and why we were wanting a modification, nothing else.  When I asked to be transfered to a supervisor who could explain to me the reason for the decline he hung up on me.


I have done a lot of research over the last few months and have done the PITI calculations as well and that was another reason why I called them.


CW says our house is worth $138k but 5 other people I have spoken to have told me between $154k and $159K. Two and a half years ago the home appraised for $175k. Does that help?

Message 3 of 9
Moderator Emeritus

Re: What are my options (refi)

Sounds like you're getting the runaround.  While there was certainly some confusion about how to apply the government criteria, most of the confusion should be sorted out.  CW is supposed to be participating in the plan.


Pay a visit to Making Home Affordable to see if you meet the qualification requirements.


What your home apprasied for 2 years ago is irrelevant.  CW might have done some sort of desktop appraisal to give you their number; if you can get them to move forward with consideration of a modification, then they'll send someone out to do a BPO.  Those other five people who gave you estimates - are they realtors or appraiser?  If not, then their opinions aren't going to carry much weight.


Message Edited by Lel on 01-28-2010 12:51 PM
Message 4 of 9
New Member

Re: What are my options (refi)

Thanks again for your insight.  I do realize that things take time to be put in place but I do believe, as you confirmed, that I am getting the runaround.

I have gone to the Making Home Affordable site and based on their elligibility check list I may qualify for the Modification.  I do know that our loan is not owned by Fannie or Freddie will this disqualify someone from the Making Home Affordable Refi AND Mod. or just the Refi.?

Message 5 of 9
Moderator Emeritus

Re: What are my options (refi)

Just the refi.  As far as I have been able to tell, there is no requirement for the loans to be backed by Fannie or Freddie.


However, just being "eligible" is NOT a guarantee of getting a modification.  The investor on your loan ultimately holds the trump card.

Message 6 of 9
New Member

Re: What are my options (refi)

Well, I am out of luck according to CW.  After explaining my situation to 3 people, giving them my financials verbally, asking what the reason was for not being "qualified" and then they hang up on me for no reason whatsoever, I am just stuck between a rock and a hard place. 

I called the "corporate" office to file a complaint for being hung up on 3 times and still being without answers.  The lady was nice (of course) and said she would find someone with the home retention dep.  Once that lady got on the phone, she explained to me that I don't qualify for the MHA Refi. because I am not current (12 months without a 30-day late) on my loan. I also don't qualify for the MHA Modification because I am current on my payments and not behind as of today.

SO, it seems like there are double standards for being "current" and being "current" depending on the option.  And she told me that they will not count the unemployment money my husband receives right now into the income to qualify us for a modification...

I will try my best and do whatever I can to pay the 3 accounts that matter on my credit report and we'll see what happens.


Message 7 of 9
Moderator Emeritus

Re: What are my options (refi)



Yes, you are receiving partially correct information.  It is true that if you have been late within the last 12 months, then you cannot do the refinance.  However, you do not have to be late (either currently or in the past) in order to get a modification.


As for whether the unemployment compensation would count to your household income, that may be at the discretion of CW to decide whether they will include it or not.  I'll try to double-check on this, but might not be able to get back to you with an answer right away.  I recommend reviewing all the info available at the Making Home Affordable website and also at the Treasury Department's website,




Message 8 of 9
New Member

Re: What are my options (refi)

Hi Lel-Thanks


Message 9 of 9