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Hello,
I need some help on my refi. Here is what is going on. We have our first mortgage from wells fargo that we pay on. The 2nd(80,000) and 3rd(30,000) notes/loans are city assisted loans that we do not pay on. We pay them off in full plus some equity share back to the city when we sell or in 45 years. We want to do a cash out refi of our first which the city allows. We owe $375k on the first and looking at a new loan of 416K. This loan will be a 7/1 arm since we do not plan on staying in our current house for more than another 3-5 years. My credit score is 715 and my wife's is 696. We where told that we could not get a arm since her score is not over 700 by our broker. Also that we would have to pay off the 3rd note with the city making the loan bigger than what we want. Either way we have to pay that 30k off in the end. We can get a 30 year but the rate is what we have now and our payment will go up more than we want. Hence the arm loan.
Our house is worth $675-700k and we paid $515K if that makes any difference.
First, you should be working with someone willing to help you get her score 4 points higher.
Also, if the second and third liens can be subordinated, your CLTV would be under 75%. Assuming that the "city" would resubordinate, I can't see an issue.
What SPECIFIC reason did your broker give regarding the requirement to pay off the third lien?
Yes the city will subordinated the liens as long as the cltv is under 90%. The broker did not give a reason as to why we have to pay off the 3rd note. She said she would have to shop around for a investor to see if not paying the 3rd lien is possible. We do have a lot of debit but the cash out would pay all of the debit off. She is working to figure out the best way to raise my wife's score. She has one credit card that is maxed out and a couple of small ones that would could pay off. We can scrape a couple of grand together.
Should I try my credit union since I have a car loan with them and one that was just paid off. They have better rates according to the website then the broker.
Should I try my credit union since I have a car loan with them and one that was just paid off.
The broker said they can't do it, shop for a different lender or broker. Are the 2nd and 3rd both city loans and both are willing to subordinate? Are you making payments on the 2nd and 3rd, could it be a DTI issue?
Last edited by thelopez2; 03-09-2014 at 12:09 PM..
Yes the city will subordinated the liens as long as the cltv is under 90%. The broker did not give a reason as to why we have to pay off the 3rd note. She said she would have to shop around for a investor to see if not paying the 3rd lien is possible. We do have a lot of debit but the cash out would pay all of the debit off. She is working to figure out the best way to raise my wife's score. She has one credit card that is maxed out and a couple of small ones that would could pay off. We can scrape a couple of grand together.
Should I try my credit union since I have a car loan with them and one that was just paid off. They have better rates according to the website then the broker.
Websites lie. pay down her card, do a rapid rescore, start the process, get the appraisal and THEN you will know where you are at. First, pop her score.
The 2nd and 3rd are both with the city. It was a program in 09 for first time home buyers. We do not pay on them at all. Yes the city will subordinate both loans. I explained to the loan officer what they notes where all about from day one. Never once did she say anything about paying off the 3rd note until she received the original notes from the city. We have a lot of credit card debt. My wife has 2 cards maxed out so I know that is hurting her score. We just do not have the money to pay the cards down much. Some medical stuff wiped out our savings. I have always been upfront with the loan officer about our scores and debt. You would think that they could of told me in the beginning that the 3rd would have to be paid off. The only reason to take money out is to pay off our debt lower our payment and rebuild our scores. Then in 3 years or so sell our house and buy the house we really want. I know I'm just moving the debt around but it is what it is.
The city wants everything done on the lender part like just like getting a loan. Then send everything to the city for review and it's either a yes or no. Petty straight forward if you ask me.
Keep in mind I don't know the interest rate and terms of your loans. Why not do a cash out and pay everything off? Your mortgages payment would go up but your credit card payment would go down. Before the medical issues did you keep you credit cards at zero and pay them off every month. If you didn't the medical issue just compounded your spending problems. Is the interest rate on the 2nd and 3rd lower than the rate of the new first?
If you take the interest amount from all of your credit cards and mortgages is it more or less than the interest rate of a new mortgage where you can pay everything off? It is possible that although you might be paying more per month, you'll get your extra principal back when you sell. Think of it as a savings account.
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