FHA streamline minus one individual on mortgage? (loan, interest rate, credit card)

[djacks]

Hi all. Seems like an active forum pertaining to information I'm inquiring about.

Situation: FHA backed Chase mortgage taken out sept 08. Fixed 30 year @ 6.75%. Remaining balance is $87,000. Current MIP is around $38 per month set to drop off late next year. Location in MI.

Currently me and my wife on mortgage. I was forced into bankruptcy in 2010. Still hasn't been 2 years out of chapter 7. Never reaffirmed my part of mortgage after bankruptcy. On top of this my credit score isn't quite up to the minimum 620-640 range most lenders are requiring. But, I've been paying the mortgage ever since new. Never a late payment and I've always added in additional principle every month for what its worth?

My wife on the other hand, never filed bankruptcy and has all her other ducks in a row pertaining to qualifying. Credit scores in the low to mid 700s, has a few open credit cards with zero balances. The only outstanding balance is a loan with a balance of $1500 (which I'd gladly pay off for her if it helped our situation) with a minimum payment of $30 monthly. The only thing I'm worried about is her qualifying for a loan on only her income (approximately $20k annually).

I'd like to take advantage of today's current low rates. If at all possible I'd like a 15 year term for the lower rate and MIP. The monthly payment would be at or near where I'm at now (above the 5% monthly reduction in interest+taxes+MIP) but would be at a lower term, so hopefully that would fly?

But on the other hand if we have to do a 30 year and accept the higher interest rate and MIP, I suppose it still might be worth it (especially if it will shave around 3% off the interest rate)? I am aware with a new contract it will be another 5 years of MIP at a doubled rate of what I'm paying now.

The biggest thing is if we can have it done just with her on the loan. Even if it looks like the mortgage is her only debt or even if we need to pool anything we have saved between both of our checking accounts into her checking account to make it look like she has at least a few thousand dollars in the bank? Like I mentioned financing $87000 on $20k annual but everything else in good shape?

I'm not worried about myself being on the mortgage at all if it will help us. Furthermore, once we get the better mortgage I understand it is much easier to add someone regardless of their credit as opposed to removing someone as that can only be done by refinancing.

Any opinions on how it could be done or even it is worth it are welcome.

[VictorBurek]

Without you on the mortgage, your wife will have to do a full credit qualifying refinance. Meaning her income would have to be great enough to qualify. If you are in a community property state, her income would have to be great enough to not only cover joint and her debts alone, but also your debts..

If her income is 20k annually, that is only $1700 per month. no way her income would allow her to qualify for a 15 year term but a new 30 year seems very realisitic.

Without a doubt, even if you cannot go with the 15 year, the 30 year would be a huge improvement.

[djacks]

Originally Posted by VictorBurek

If her income is 20k annually, that is only $1700 per month. no way her income would allow her to qualify for a 15 year term but a new 30 year seems very realisitic.

Without a doubt, even if you cannot go with the 15 year, the 30 year would be a huge improvement.

Thanks so much for the reply! I thought maybe 15 would be a stretch, but thought I'd bring it up. Interestingly enough she did receive something from (I don't know if I can mention names?) bank. Anyway, very large, legit bank so definitely not a scam. It says FHA Streamline Special. Its telling her she may eligible for an FHA streamline. It says also it may or may not require an appraisal. In most cases they can pay closing costs. It just asked for 2 things:
1) Drivers license number and expiration for all persons on the loan
2) Current employment name, position held, address and phone number along with a current pay stub for all persons on the loan.

I'm hoping by "all persons" maybe they mean just who would qualify to be on the loan and not everyone who is currently on the loan, because at all costs I'd like to leave my name off.

Furthermore, it says "Preferred Customer Status" in bold and it was just addressed only to her. She is the primary borrower on the mortgage currently, but I'm on the mortgage too. Maybe I'm looking into this too much, but maybe they are thinking what I'm thinking and would try it with just her?

I did talk to this bank last week and they said FHA streamline rates with them are @ 3.75% for 30 years.