Impossible to refinance? (foreclosure, credit score, rate, refinancing)

[FarmGirl1982]

Hello,

We are looking for advice about what we should do with my fiance's home. BofA won't give him the time of day when it comes to a refi. He's called multiple times about the new refinance programs out there, but is always told he doesn't qualify because he is upside down in his home, hasn't missed any payments and makes too much money.

The home is owned by my fiance, here is what he has:
- 40 year loan
- 6.25%
- Current payments are $1453 a month (plus flood ins, taxes), and they will go up at year 10 to include principle and interest
- Bought home in 2007 at $237k, owe $230k
- Not sure exactly how much the home is worth now, but I would say somewhere in the low $100s
- He makes $95k a year
- 815 credit score
- Live in Sacramento, CA

Does anyone know of any refinancing options for us, or are we stuck? Can we stop making payments for a few months to get qualified for something, or would that severely damage his credit?

We would like to move out of state in the next few years. We do have the option of renting the home out, but rentals in the area are only going for $1200 a month, so we would be eating about $500 a month now, and even more then that once we hit the 10 year mark.

Foreclosure is also another option. Not appealing, but an option none the less. With a high credit score to start with, will a foreclosure really hurt his score that much? I have good credit on my own to buy another house so we aren't worried about not being able to buy another house for 7 years, I have the covered if we foreclose.

Thanks in advance for any help! Lots of questions

[thomasdavie]

Hi. You have options.

I am very surprised that BOA would not do a rate term refi on it.

I would NOT advise a foreclosure nor missing any payments. This will wreck his hard earned credit score and accomplishes little.

If he has no hardship and he just wants to get out from under , I know what I would do.

When you move, go buy another house. Seems like you and your fiance can afford it.

Then ask BOA if you can do a 'short sale' on the original house, which now becomes a 'rental' . Banks are far more willing to do short sales on rental properties as owners tend to walk away and crimminals come trash the place because they dont live there and do not need to maintain it.

So in short, when you guys move, buy another house, then ask to do a short sale on the old property and if they refuse (which i doubt) then rent it out until housing prices go out so you are no longer underneath.

Hope this helps

Thomas Davie

NMLS # 960141