Advice for current friend's situation...

My friend has a mortgage for about $87k on a property that is around $160k FMV right now. His interest rate is 9.85%. He has poor credit and has a spotty work history. Is there a way that he can refinance either through a government program or are there some other creative techniques he can employ?

I wonder if he could try getting a home equity loan to pay off his very high mortgage. The interest rate on a home equity loan has to be less than 9%. Plus with an equity position of 54%, I bet a lender will overlook is poor credit as long as he can prove that his monthly payment has always been made on time.

What’s the reason for the refinance? If it’s to improve his rate, my advice is not to do it. Interest rates are a direct reflection of the credit risk. With less than a 60% LTV there are a few equity lenders that would take a look at him, but he won’t improve his rate enough to justify the cost. Making additional payments to principal could reduce his effective rate. If he’s looking for cash out, I’m sure there’s a good lender on this site that could be helpful. Call them for the best advice.
Good luck!

It’s been a while since I last posted.

He’s consistently made the payments but is not in too different a position still. I got updated that the mortgage has been paid down to under $84k and property values are a little higher, if that. His biggest worry is showing his income. His goal is to get a lower interest rate and take some cash out if possible.

Any lenders out there with some feedback?