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empoweryou2 · Joined: 03 Nov 2006 Posts: 1 1.32 Dollars($)

Poor business situation and payments of 30,000 due IRS caused us to refiance a few years ago with an ARM, which has now shot up to 9.25%. My score is 579 and spouse's is 563. Really want to get away from this ARM and the 20K in unsecured debt. Talked to a mortgage company and they've recommended 8.95% to keep for a year, paying off all revolving debt and suggested refi again in a year when credit scores are improved.

I just have no idea if this is the right way to go.

Guest

Hi,

As your and your spouse's scores are not high enough the rates you will be offered are going to be in the range what this mortgage company offered.

Paying off the unsecured debts will be quite helpful to get your score to move in the positive direction. But do keep some cards and make regular payments upon them so that it also shows up on your credit report that you are regular with your payments.

Guest

Improvements in the credit score do start to show up within 6 months and after your current refinance if you wait for a year and then go for another refinance, I also think you will be able to get lower rates than you are being offered currently.

Guest

Another option could be cash out refinance to get the cash to pay for the unsecured debts and also pay extra points to get a somewhat reduced rate.

If you are not planning to move out within a short while then a fixed rate mortgage will be far better than the ARM.

Guest

Apply on Rate.com and you will get a call from a qualified mortgage consultant that can help you out with this situation.

sara · Posted: Sun Nov 05, 2006 10:06 am Post subject: RE: How to get out of debts

Hi Guest,

Though you have been offered a rate lower than that on your existing loan, I feel that you should look around for a comparatively low rate and for that you need to shop with a number of lenders. And, if possible, go for a cash-out refinance and not the usual refinance loan.

With a cash-out refinance loan, you can pay off the unsecured debts so that you are left with the home loan only. And, making monthly payments on a single loan is preferable than paying for more than one.

There is a section on Cash-out Refinance where the community has provided some information. You may go through it for more knowledge.

Thanks,

Sara.

sitalotbeach · Joined: 03 Nov 2006 Posts: 48 23.63 Dollars($)

Dear Empower u 2,

It sounds like you right now you would like a more reasonable rate and not an adjustable.

Depending on your Loan-to-value, meaning the value of your home and how much the new loan will be, you may qualify for a conforming rate.

Conforming rates are usually in the 6.50 to 7.00 range for your credit score. The last 3 customers I've dealt with in the past month have recieved those type rates.

Its sad to say, you really are at the 'mercy' of your loan consultant and how much experience they have in finding the right loan for your situation.

I, myself went through the process of refinancing our home last year and it was such a battle to weed through the 'false' offers and 'pushy type' salespeople. AND I'm in the business! So I knew what I was up against.

Advice: 'Shop' only 3 lenders. (a good mortgage broker will pull credit once and then send your file to 3 lenders so your credit should NOT be pulled more than once w/broker).

Check out the cash-out refinance on this web site for more advice.

Do not sign anything until you have all disclosures in writing; Good Faith Estimate, Truth-in-lending statement. If you don't receive these disclosures-stop talking to the lender, something is a little fishey. By Law they must send, fax or email these things to you in 3 business days.

Know the value of your home by visiting.www.zillow.com the values there are not 'gospel' so to speak but its a start.

Know how much you can afford to pay each month. Add up the bills, mortgage payment together, see what you pay now. Anything less than what your paying now as a total is going to provide you cash flow.

Good Luck!

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Advice please! I have no idea the best way to go