What should I expect on a refi on primary residence only owning the home for 9 months and with low scores. The three now are 575, 588,565. the purchase amount was 411,000, but 60,000 down initally. The balance owed is 349,000. The homes that are similar to mine that have sold in my area have sold for 500-525,000 since we purchased. I am looking to take out the 60,000 that we put in for investing in real estate and to cover some remodeling work to my home. I’m pretty sure I will need to go stated if possible, but what are the options. Is there any lenders that can do this without killing me in points and fees? I heard from one source ,that I should be looking to pay at least 4 points with the scores is this too much? My rate now is 7.4% interest only payments are 2505.00 a month. I’m okay with a higher payment, because I will be holding the mortg. in reserves with cashout only until my scores come up to get a good fixed rate in 4-6 months. Looking for something without a prepayment penalty. Anybody with any good ideas please feel free to respond back your help and opinions are greatly needed and appreciated.
4 points is a little extreme, I don’t think I’ve ever charged that much on a loan over $150,000 in my life. However some situations could call for it (needing to get a loan closed in a week, etc.). But just because someone doesn’t have good credit shouldn’t mean they have to pay more in fees (unless they want the same low rate someone with good credit would qualify for, then that usually involves buying the rate down, which in your case wouldn’t be recommended since you are planning to refinance again).
With 575, 588, & 565 scores a home equity loan/line of credit might be possible, that way you wouldn’t have to pay all of the refinancing fees (2nd mortgage fees are usually less).
If that doesn’t work then with a 575 score, stated income, cashing out to 80% of your current value shouldn’t be a problem, some sub-prime lenders will go to 85% LTV too. To protect yourself from getting over-charged ask for a good faith estimate (lenders & brokers are required to re-disclose you prior to closing if the terms change during the process) before a formal application is submitted on your behalf. You can also shop around so you aren’t stuck with what one lender or broker tells you.
You really need to speak with a sub-prime loan officer. You definitely have the qualifications for the loan you are looking for. I also know you can borrower up to 90% if you so choose. The rates won’t be too pretty, but for a temporary loan they won’t hurt you much either. You just have to know who to work with. A sub-prime broker, such as myself ;), can get you the loan you are looking for.
Mark Forsyth
What type of rates and or points should I be looking at paying? I guess what I’m looking for is a range here on both. I was also wondering if anyone has a brief list of sub-prime lenders that can loan 80-95% ltv with scores this low. At least I’ll have a few to look thru as far as what can be done or not done. I want to start the loan applications this evening, if I can get a list of sub-primers that might able to do this in about a 2-3 week time frame. Thanks Guys appreciate your help. Mark what’s turnaround time with you guys??
The companies I had in mind are wholesale lenders which means they require a broker to submit an application. Turnaround with this company (argent) is very quick. I recently closed a loan with them in a week. Depending on when title and appraisal come in they can close as soon as you want.
The other company I had in mind is a bit slower, but could still fit in your timeframe. I really do prefer Argent as they are much more lenient with their stipulations.
As far as points, you should plan on paying between 1.5-2.5 max. Unless you want to buy your rate down. Keep in mind the points determine the loan officers commission. Anyone who quotes you 4 points is most likely being greedy. with a loan your size you don’t need to pay that much, no matter how fast you want to close.
Also, don’t apply to multiple lenders tonight. They will all want to pull a credit report which will drop your score. (i hope I’m not breaking any rules here) Send me an email and I’ll run you through some scenarios without a credit report so you can get a feel of what you want. Then you will only need to run your credit once. If you lose too many more points on your FICO you may not qualify for the loan you want.
I know that you have at least a 2 week window when applying for these types of loans, so it won’t affect your score as long as the credit is pulled within a 2 week time frame. Fox5 did a special on this at least twice last year. I have run across a few brokers that mentioned the same thing, but weren’t aware of the time frame issue with the pulls.
Yeah, I’m familiar with the 2 week rule. And I’m not trying to scare you, but there seems to be a difference between what should be and what usually happens. I hope the rule applies in your case. Either way, I’d be happy to work with you if you so choose, but make sure you check out Argent. They have some great programs.
I side with Mark on this, inquiries within the 14-day window are only supposed to count as 1 when it comes to scoring, but isn’t always the case. Because certain trade lines update/report at various times during the month (likely to happen in that 14-day window), your score could change but not because of the additional inquiry. Still, it’s good to have your credit run as few times as possible, if you can get a copy of your tri-merged credit report that would be best, then you wouldn’t need to spare more than that inquiry to get it.
IMO I don’t think Argent is a good lender. They are the wholesale division of Ameriquest who is currently under investigation in about 30 states, not only allegations of loan officers commiting fraudulent activity when originating the loan (wouldn’t be the case if you are going to their Argent division, which is only available to brokers) but also for their mortgage servicing practices (which could be the case if your loan ends up with their servicing department instead of HSBC or whomever else). The community at msfraud.org has quite a bit to say about Ameriquest and it’d be worth checking out - they’ve already set aside $325 million anticipating to settle the lawsuit.
I side with Mark on this, inquiries within the 14-day window are only supposed to count as 1 when it comes to scoring, but isn’t always the case. Because certain trade lines update/report at various times during the month (likely to happen in that 14-day window).
What do you mean by trade lines?
Where can I get a trimerge report from?
I have another question I was told by an ex credit bureau worker a few years ago. That whatever (company), or whomever is pulling your credit make sure they’re using the most updated software that the bureaus are using. She said the software version a particular company uses to pull your credit might not have the latest verson or service pack upgrades to pull the most current score. You can easily get a lower score pulled just because the software the company is using to pull the credit is old and out dated, but this seems to be at the consumers expense. I’m planning on calling/writing the bureaus to see if this software issue is valid. If it is, it’s good info to know. Anyone have any thoughts on this one? Just trying to gather as much info as possible.
Thanks Shane for the update on Ameirquest I get stuff from them all the time.
Trade lines are your credit card, car loan, student loan, anything that reports to your credit report. Not all trade lines report/update on the 1st of the month, sometimes they report on the 3rd, the 11th, the 18th, the 25th, etc. If the first time during the 14-day window your credit is pulled is on the 1st, and but your credit card balance updates on the 3rd, then the credit report pulled on the 5th would likely have a different score.
Where can I get a trimerge report from?
Just about all mortgage lenders & brokers run a tri-merge (it’s your EFX, TU, & XPN reports merged into 1). The closest thing I have seen available to a consumer is getting your 3 seperate reports from myFICO.com, the scores that myFICO.com gives you are always very to close to what I have pulled when reports are pulled within a few days. However myFICO.com doesn’t put your report in the easy to read format tri-merged reports are in (since myFICO.com lists each trade line 1 time for each bureau it’s reported to), so it’s not as “quick”.
And yes, the software that your credit is run with should be the most up to date. The credit vendors that lenders & brokers use almost always automatically update their software when new versions are released so while it is a concern, it normally isn’t a common issue.
I have pulled my scores from myfico, and I also signed up for the other credit report pgms from transunion(truecredit.com) and creditexpert(experian). They each chg a yearly fee, but with the alerts and updates, I find it useful in keeping track of what’s going on now with my credit. I have noticed that my mortgage is only showing on one. Won’t it be benefical for me to somehow get them to report to all three? Is that even possible? I’m sure this will help my score.
Does anyone know the # to experian where you can speak to a live person? I have tried the 2 numbers that came with my credit report, and the # creditexperts.com gave me who offers the credit monitoring system I purchased, but they just gave my the same numbers I got from the experian site and off my ordered credit report. I need to fax to them a copy of some paid off items. I was able to get through to the other 2 trans/equifax, but no luck w/experian…
I just know the XPN number from the website.
If you have 6 or more months of mortgage history it would be beneficial to get them to report to all 3 bureaus, however they are not required to. You can ask them to report to the other 2 bureaus, usually putting something in the letter such as “Please report my payments to all 3 credit reporting agencies (XPN, TU, EFX) to protect me from possible indentity fraud”. The ‘identity fraud’ usually gets creditors attention.