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I'm thinking about trying to refinance later this year. I posted a thread in the economics section but it had more to do then mortgages. Someone suggested recasting and it sounded like a good idea but I have a USDA loan so I don't think I can do that. Why it sounded good is because even though I have excellent established credit with open and closed accounts, I am considered self employed. To complicate matters I get a W2 as well as a 1099 from one job and the rest is reported cash. It is all the same line of work and has been steady for years but it was a pain to get the initial mortgage. I have almost enough at the moment and definitely will later this year to put down what would be equivalent to 20% of the value of my house to have a new mortgage of 110,000. Considerably less then the 138,000 I still owe @ 5%.
When I bought the house my wife, a recent immigrant, was not working so the mortgage is completely in my name though the deed is in both names. She has now had steady employment at this job for what would be 2 years by the time I plan to do this. Both of our incomes together as we file taxes jointly would be well within the required amount. Mine alone is borderline because with my deductions, incl my IRA, my income on paper gets slashed. The joys of getting payed cash.
Of course in keeping with the never having anything easy theme my life follows, my wife has no credit history. I'm wondering if anyone knows how long it takes to establish credit from -0-. I'm hoping she can get a credit card ASAP and to actually buy things on it but pay off at the end of the month. She also wants a new sofa. I think she should try to get financing for it and pay it off over a 4 or 6 month period even though she has the cash. But I don't know if she could even get these things because we tried to get her credit for a TV last Nov. and they wouldn't approve her. She ended up paying cash. Any pointers on establishing credit for a mortgage refinance approval? I'm assuming that in order to use her income with mine she's going to have to have good credit as well. If she does by chance build some up would it even be worth refinancing? Why I ask is I'm at 5% now, would her only having a short credit history possibly make us together only qualify with a higher percentage?
Do a google search on "secured credit cards" and start there. Credit unions are typically best. Pay careful attention to the annual fee and ask about the fee to close the account, that's where they usually get you. The way it works your limit is whatever you have on deposit. So if you want a $500 limit, you would have to open a $500 savings account, which acts as security against the card. Your wife should never take the balance over 50% of the limit. If you have any credit cards in good standing (ie never late), add her to those accounts as an authorized user. And for Pete's sake, don't let any of these payments be late, you'll be toast before you even get started!
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