Another mortgage question

[winecat]

In 2003 I refinanced my house thinking I'd sell it when the market improved.  I'd just gotten married and we'd moved to our "marital home."  Well, that went to shit shortly after the ink was dry on our marriage certificate.  I got laid off 4 months after getting married.  I started a business in Feb 2008, right before the market crashed.  That was also a shitshow but I made it through.  Through the downturn, my mortgage rate adjusted down so all was well.  It's crept up, of course.  It took me ages to get on my feet, pay off credit cards, and do better in my business.  But it's still not been long enough to qualify for a conventional mortgage.  

Option A: It looks like regulations are loosening and people are now able to get the 'no doc' type loans.  I have excellent credit and it looks like I might be able to qualify for one.  Are they as sketchy as I'm worried they might be?  Pro is that I can do this on my own.  Con is that the loan might be resold to a shitty company sometime in the future.

Option B is to have my brother co-sign on my mortgage.  (We have a good relationship.  He knows that I've always made my mortgage payment, no matter what.)  I'd like to go through my credit union since they don't sell their mortgages.  My current mortgage is with a super sketchy company (Select Portfolio Servicing) and the ARM is based on the LIBOR which is going away by 2022.  It sounds like experts are still debating as to what might happen to the loans tied to LIBOR for their rates?  Pro is that my loan and money stay local.  Con is that I can't qualify on my own.  

My loan to value is 18.2%.  (I bought the house 20 years ago and my area has appreciated a lot.)  My current mortgage is less than $100k which I've heard can be more difficult to get?  I haven't looked or dealt with mortgage stuff since 2008 so I'm a bit overwhelmed and, from what I remember, didn't have a good experience with mortgage officers.  

pdq my wall of text 

[winecat]

If I missed a vital piece of info, let me know. TIA

[farfalla2011]

Questions I have for clarification.

You are 15 years into your mortgage, right?

What is your main goal in refinancing? Interest rate, payment, getting the loan into just your name, etc?

Is the LTV based on current value or value at the time of the loan?

[Cappy]

I feel like I need to know some #s to wrap my brain around your situation:

What is your exact loan balance now?
What % interest rate (and is this still variable?)
What is the original length of the loan?
How many more years left on the loan?
Are you living there as your primary residence now?

Are you trying to lower the payment, remove the volatility of that variable interest rate, pay it off, get rid of PMI, etc.? What part is hurting the most?

[winecat]

Dec 10, 2019 10:40:32 GMT -5 farfalla2011 said:

Questions I have for clarification.

You are 15 years into your mortgage, right? 16, actually.  I just checked the paperwork.  Apparently, I refinanced just before I got married instead of after.  

What is your main goal in refinancing? Interest rate, payment, getting the loan into just your name, etc?  Fixed interest rate.  So far I've been okay but I'm worried about the interest rate getting really high.  It's currently at 5.375% because LIBOR was just above 3% when the loan rate set.  It should reset lower this spring but it can go up to 9%.  And then not knowing what's going to happen to loans based on LIBOR when it goes away.  

Is the LTV based on current value or value at the time of the loan? Current value.  I've paid off about half of the original mortgage.  I wish I'd been able to do this earlier but I was barely hanging on so here I am.

[winecat]

Dec 10, 2019 11:00:09 GMT -5 Cappy said:

I feel like I need to know some #s to wrap my brain around your situation:

What is your exact loan balance now? $82,000
What % interest rate (and is this still variable?) 5.375% and still variable
What is the original length of the loan? 30
How many more years left on the loan? 14
Are you living there as your primary residence now? Yes

Are you trying to lower the payment, remove the volatility of that variable interest rate, pay it off, get rid of PMI, etc.? What part is hurting the most? The anxiety over the interest rate getting crazy high.  People look at me like I have 2 heads when I say I have an ARM.

[Violet]

I'd try option A and do your research on the bank beforehand. I've heard this bank is good and they have good reviews on SmartAsset & BankRate: edit: removed link, I'm not sure they do loans outside of NY.  Edit 2: this article seems helpful to find a lender: www.nonprimelenders.com/lenders/

Then I'd try the credit union with no co-signer. Many companies will verify income with tax returns or financial statements of your company. Also, the fact that it's a refi with a lot of equity really helps you. You might be able to qualify on your own. If not, tell them to add your brother to the loan. The credit window is still like 30 days for the same type of pull so I think you could do it in that order and not affect your score.

[farfalla2011]

I would definitely go with option A and then look at B if A doesn't work. As violet said, your equity in the home and such a long good standing of your existing mortgage will be very helpful.

If you could swing the payment, I'd also look at doing a 15 year mortgage rather than 30 so you don't undo your hard work of making so much progress. Your payment I would think should be similar to, possibly less than, it is now due to the lower interest rate. Although, I may be wrong since I didn't calculate the numbers.

[dr.girlfriend]

I feel like I'm missing something big. Are you still married? Is this the "marital home" you are referring to or your "single-person home" that you kept and are now back in?

[winecat]

Dec 10, 2019 11:42:07 GMT -5 Violet said:

I'd try option A and do your research on the bank beforehand. I've heard this bank is good and they have good reviews on SmartAsset & BankRate: edit: removed link, I'm not sure they do loans outside of NY.  Edit 2: this article seems helpful to find a lender: www.nonprimelenders.com/lenders/

Then I'd try the credit union with no co-signer. Many companies will verify income with tax returns or financial statements of your company. Also, the fact that it's a refi with a lot of equity really helps you. You might be able to qualify on your own. If not, tell them to add your brother to the loan. The credit window is still like 30 days for the same type of pull so I think you could do it in that order and not affect your score.

The last time I got a mortgage, I don't remember the broker giving me an option to pick the lender.  I can do that?  I'll have to call my credit union to see if they offer something I'd qualify for as a business owner.  Online they didn't have anything about it and specifically mentioned needing W2s.  

[winecat]

Dec 10, 2019 12:28:22 GMT -5 dr.girlfriend said:

I feel like I'm missing something big. Are you still married? Is this the "marital home" you are referring to or your "single-person home" that you kept and are now back in?

Not married.  This is the house I bought before I got married and thankfully couldn't sell due to the housing slump we had here.  

[winecat]

Dec 10, 2019 11:54:40 GMT -5 farfalla2011 said:

I would definitely go with option A and then look at B if A doesn't work. As violet said, your equity in the home and such a long good standing of your existing mortgage will be very helpful.

If you could swing the payment, I'd also look at doing a 15 year mortgage rather than 30 so you don't undo your hard work of making so much progress. Your payment I would think should be similar to, possibly less than, it is now due to the lower interest rate. Although, I may be wrong since I didn't calculate the numbers.

Yeah- I was definitely going to go for a lower term mortgage if I can swing the numbers.  I wish I'd been able to do this earlier but it was so rough for so long.  

[winecat]

I guess I don't *have* to refinance. My rate has to stay within 2.375% of the current index rate. I'm not sure what the best decision is. I assumed that getting rid of the ARM is important because you don't often hear of people with ARMs longterm.

[HitchedIn2006]

Dec 10, 2019 14:09:22 GMT -5 winecat said:

I guess I don't *have* to refinance. My rate has to stay within 2.375% of the current index rate. I'm not sure what the best decision is. I assumed that getting rid of the ARM is important because you don't often hear of people with ARMs longterm.

Call the credit union and see what they can do. Report back 🙂

[k3am]

winecat, I don't think it hurts to check. If you can get a lower rate than what you have now, you might save money long term and you'll definitely have less risk going forward. There have been time Las that mortgage rates were closer to 10%. If you could choose to be fixed <4% vs the possibility of floating at close to 10%, I think that probably makes sense, assuming the fees aren't astronomical.

[madisen]

Adding borrowers/applicants to a mortgage helps with income, not credit. Traditional mortgages will use the middle score or worst of two scores for the lowest credit score applicant for qualifying purposes.

[imojoebunny]

Your loan to value is 18.2%, or you have 18.2% equity? I can't imagine even the most asshole lenders caring, if you want to get a loan for that amount, on a house that has a loan to value of 18.2%, if you have even under $25K in provable income.

[winecat]

I called my credit union. The person I spoke with said that they have a loan program for people with low balances. It's 10 years at 3.875-4% with "no closing costs." She recommended this over a 15 year loan because of the closing cost difference. She said that they could use my schedule C from my tax return. If I do refi, I want to wait until after I can do my taxes since 2019 will be better. She said that many lower balance loans have higher interest rates and one reason why they have a specific product for lower loan balances.

[winecat]

Dec 10, 2019 19:01:03 GMT -5 madisen said:

Adding borrowers/applicants to a mortgage helps with income, not credit. Traditional mortgages will use the middle score or worst of two scores for the lowest credit score applicant for qualifying purposes.

Yeah- I'd need help with income.  No matter how shitty it got, I haven't had a late payment so my credit is excellent.  

[winecat]

imojoebunny- 18.2% LTV. My neighborhood has increased in value a lot since I bought my house.

[imojoebunny]

Dec 10, 2019 19:45:01 GMT -5 winecat said:

imojoebunny - 18.2% LTV. My neighborhood has increased in value a lot since I bought my house.

So if you have been paying for 15 years, and have 18.2% LTV and you now have a mortgage of $100K, your house is worth $550K?  I have a loan of a similar value, with a similar current value house.  As long as you can prove your make $25K+ taxes and insurance, and taxes can be a killer when values rise that much (our's on that house are $10K, on a house we paid $150K for, more than the original mortgage), you should not have trouble refinancing.   Your are the best deal going!  Your loan is essentially secured 4X over.  I would shop for lenders, do it in a short time frame, so you don't have a bunch of hits on your credit, but if you can't get decent financing, the game is wrong and lenders have lost their minds. 

[winecat]

imojoebunny- Pretty close- mortgage is $82k and home value is $450k. Thankfully our taxes here aren't too bad. I pay about $2400/year. (When I bought my house, the property taxes were $500 a year! So it's not bad but still a lot more.) It's been such a struggle that it's hard to believe that I might not be in a completely shitty situation now.

[Cappy]

Dec 10, 2019 20:08:15 GMT -5 imojoebunny said:

Dec 10, 2019 19:45:01 GMT -5 winecat said:

imojoebunny - 18.2% LTV. My neighborhood has increased in value a lot since I bought my house.

So if you have been paying for 15 years, and have 18.2% LTV and you now have a mortgage of $100K, your house is worth $550K?  I have a loan of a similar value, with a similar current value house.  As long as you can prove your make $25K+ taxes and insurance, and taxes can be a killer when values rise that much (our's on that house are $10K, on a house we paid $150K for, more than the original mortgage), you should not have trouble refinancing.   Your are the best deal going!  Your loan is essentially secured 4X over.  I would shop for lenders, do it in a short time frame, so you don't have a bunch of hits on your credit, but if you can't get decent financing, the game is wrong and lenders have lost their minds. 

This! If you have that much equity and a job you should have zero issue refinancing to a fixed rate 10 or 15 year loan and interest rates are still low. I think your worries are unfounded. 

[winecat]

Dec 11, 2019 9:53:11 GMT -5 Cappy said:

Dec 10, 2019 20:08:15 GMT -5 imojoebunny said:

So if you have been paying for 15 years, and have 18.2% LTV and you now have a mortgage of $100K, your house is worth $550K?  I have a loan of a similar value, with a similar current value house.  As long as you can prove your make $25K+ taxes and insurance, and taxes can be a killer when values rise that much (our's on that house are $10K, on a house we paid $150K for, more than the original mortgage), you should not have trouble refinancing.   Your are the best deal going!  Your loan is essentially secured 4X over.  I would shop for lenders, do it in a short time frame, so you don't have a bunch of hits on your credit, but if you can't get decent financing, the game is wrong and lenders have lost their minds. 

This! If you have that much equity and a job you should have zero issue refinancing to a fixed rate 10 or 15 year loan and interest rates are still low. I think your worries are unfounded. 

If I had a W2 job, I wouldn't be concerned but I don't.  I've only heard 'how hard it is' to qualify for a mortgage if you're self-employed, especially after the housing crisis and lenders giving loans to people who couldn't afford it. 

[imojoebunny]

Dec 11, 2019 11:30:59 GMT -5 winecat said:

Dec 11, 2019 9:53:11 GMT -5 Cappy said:

This! If you have that much equity and a job you should have zero issue refinancing to a fixed rate 10 or 15 year loan and interest rates are still low. I think your worries are unfounded. 

If I had a W2 job, I wouldn't be concerned but I don't.  I've only heard 'how hard it is' to qualify for a mortgage if you're self-employed, especially after the housing crisis and lenders giving loans to people who couldn't afford it. 

It definitely can be harder, but plenty of self employed people have mortgages.  You have great credit, tons of equity, and presumably can show income to cover an $100K loan + taxes of $4K a year, you are a mortgage lenders dream!

[Cappy]

Dec 11, 2019 11:30:59 GMT -5 winecat said:

Dec 11, 2019 9:53:11 GMT -5 Cappy said:

This! If you have that much equity and a job you should have zero issue refinancing to a fixed rate 10 or 15 year loan and interest rates are still low. I think your worries are unfounded. 

If I had a W2 job, I wouldn't be concerned but I don't.  I've only heard 'how hard it is' to qualify for a mortgage if you're self-employed, especially after the housing crisis and lenders giving loans to people who couldn't afford it. 

It does not cost anything to speak to a mortgage broker. I'd reach out and have them consult. Pull together your past years of taxes and get yourself an appointment.