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krenee7600 · Joined: 30 Nov 2007 Posts: 1 1.94 Dollars($)

My husband and I bought our house in October of 2005. We got an excellent deal on it for 220k. It didn’t meet our needs at the time, but we figured we could fix it up and sell it for a profit. We spent around 80k on improvements and the house is now worth 350-360k. We now love our home and do not want to move.

During this time we also got married and spent a lot of money on our wedding.

We currently have about 60k in debt outside of our mortgage (we owe 240k house appraised for 245k when we purchased it and the bank let us borrow up to the appraised value) We have an 80/20 both threw Flagstar – 6.125% on 1st and prime + 2.5 on 2nd (so currently around 10%).

I became self employed around 5 months ago and my husband only makes 40k per year (I make at least 1k per week and that will continue to grow). We are young (25 and 29) so we don’t have a lot of established credit so when we took out the additional debt (and maxed out credit cards) our FICO scores dropped from the mid 700’s to the low 600’s although we have nothing negative reported (have never paid anything late).

I contacted Bank of America (our bank for years) and we were approved to refi our 2nd for 90% LTV and the appraisal was scheduled for tomorrow morning. Bank of America just called and said they would not be able to do the loan because I haven’t been self employed for 2 years. I was very open about my self employment and for the last 2 weeks they said it wouldn’t be a problem.

We are barely able to pay our bills with our interest rates being so high on the 60k in other debt and need to refi our second mortgage. Our debt would have gone down by almost 2k per month with this refi. We don’t want to sell and are afraid it might take 6 months to sell if we absolutely have to.

My mother has perfect credit with an 800 FICO score. She has no debt and is willing to co-sign and let me refi in 2 years when my employment can be verified. But she is a housewife and would not be able to verify income.

Is there any hope for us to be able to find a lender that will refi our 49k 2nd and make it 110k?

livinginnky · Posted: Sat Dec 01, 2007 12:46 pm Post subject:

Unfortunately most lenders will want at minimum 12 months experience for self employed borrowers. You need what is called a no doc loan but with 600 scores I don't think it would be possible. Maxing out credit cards will definately drop your scores and they will stay low until you catch up the balances.

Not to say that you can't find a lender, I believe any program that you would qualify for would be higher rates than you alreay pay. Sometimes selling is the only answer. It is better to face that now as I think you have instead of facing foreclosure or bankruptcy.

This may or may not help but I figured this out a while back... A house is not a home without the family in it. You guys fell in love with this house? No, I think you fell in love with each other, and any house you live in, you will make your home. A house is just a shell that keeps the rain out. Home is where you are happy and where your heart is. I hope this can somehow help you.

Best of luck.

scherzeroni · Joined: 05 Jan 2008 Posts: 51 18.77 Dollars($)

2 years of self employment is standard. The loan officer at bank of america should have told you this upfront. You might be able to get a mortgage but I would suggest a mortgage broker that has access to many mortgage lenders and could see if there is one that will give you a second mortgage. Since you have been self employed for only 5 months they will only use your husbands income to qualify you. You might want to look into just doing the second mortgage in his name and that way if you have any debts in your name, they wont be counted against his debt to income ratio.

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Help need to refi 2nd