Q: I came out of a Chapter 13 bankruptcy in April 2009. My credit scores range from a low of 623 (Equifax) to 659 (Trans Union). Home is worth about $350,000 and I owe about $90,000 against it. I cannot get any lender to look at a refinance or even a home equity loan. Any advice would be greatly appreciated. We have been in our home for 20 years and its a shame that we can't get any equity out of our home for improvements or a refinance. Please help?
A: In theory, you should be eligible for a new mortgage just two years out of a Chapter 13 discharge. However, your low score (and smallish loan amount) means your loan is going to be more difficult to place and even then will produce little income for the lender. Also, your low score will find your final mortgage rate moved higher since your risk profile is greater. You should continue to try to build your credit score and talk to additional lenders about an FHA-backed loan. Finding a second-lien home equity product with a low score will be an even greater challenge.
- Refinance into an Adjustable Rate Mortgage (ARM)
If you are considering a refinance, here are some great considerations to help you decide if an adjustable rate mortgage (ARM) is right for you.
- What is a home equity line of credit?
A home equity line of credit is a type of second mortgage that allows homeowners to borrow money using their home as collateral.
- What is a home equity loan?
Homeowners with equity in their property can take out a home equity loan that uses their home as collateral.
- HSH.com’s annual outlook: 2019 Mortgage and Housing Market Forecasts
At the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year. Come each July, we review to see if our expectations are being met or not.
- What is a rate and term refinance?
Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.