Need help with mortgage ideas for refi-ing and lowering payments?

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My husband and I owe 172k on our house and it appraised at 215k in July of 2006 when we did a Texas Cash Out loan. Our current interest rate is 7.875 and our PI payment is 1244.00 a month. There is no doubt in my mind that the house would appraise for 230k due to the market in our area. We can make the payment, but it is a struggle. My husbands credit score is around a 600 and we have made our payments on time every month since 10-2005 except one payment in12-06. I have contact our current mortgage lender and discussed a refi with them, however they tell me that the interest rates are on the rise and can’t help me? Does anyone have any ideas what we can do to get our payments lower without selling the house?

  1. Reply
    Andrea - Mortgage Specialist
    February 11, 2011 at 1:30 pm

    Despite the value in your home, your credit score and recent late payment (within the past 6 months) is hurting you. Have you looked at what type of things you can do to increase your credit score? Can you pay down credit cards, pay off collections? Rates are still good in the 6’s, but if your credit isn’t good you are looking at sub-prime rates which could put you right back to where you started. You may be able to find a better rate by paying discount points, and therefore getting a lower rate than you have now.
    Let me know if you have more questions!
    Andrea –,

  2. Reply
    February 11, 2011 at 1:59 pm

    I am from Texas too, so I know a little about the laws there. Let me start by saying Texas only allows 100% finance option at date of sale. Some states will allow up too 125% of value financing. Our state is unfortunatly not one of them. Having said this even if your home appraises for 230 you will only be able to finance 80% of that amount. So if you owe 172 on it know you will only be able to borrow 184 now (if it appraises for 230) which is only 12000 dollars.

    Now I don’t know your financials but by the way you talk I don’t think 12000 doolars is going make you debt free. Therefore refinancing for that small amount of cash is not smart. Also this will not lower your payment.

    Heres a few questions to ask yourself…is your house available to be classified as ag land? This will lower your taxes which will lower your payment. Also search different Ins. companies. ( I used Frost Ins in Texas and they were the best value, you should try them )If your ins. is lowered your payment will be lower. Also check your coverages, you may be over covered. Also did you homestead your home this year? When you homestead your home it will lower your taxes as well.

    Another thing is look at cutting other bills you may have like a/c bills by keeping your thermostat at 76 – 78 until you go go to bed. This will lower your electric bills a lot. Maybe lower your cable bill by not having as many luxury channels. If your like me you probably have some credit card debt. Attack this hard. Pick the card with the most interest and pay more than the minimum payment. Keep paying the minimum on the others and once you’ve payed that one off take the extra money and apply it to the next highest intrest card. It will take a while but you can make it back. ( I had to do it as well and I am just now after 2 years about to crawl out of my hole and this is how I did it )

    I don’t recomend this but last but not least you can get an interest only loan which will lower your payment CONSIDERABLY. <-- Click that url I just put there and you can see how one of these loans work. Just remember the longer you have one of those loans the worse it is. You never pay towrd the principle of your note at all. But maybe for a few years to get back on your feet it might be ok. I personally wouldn't. Kinda went off on a tangent but I hope all this info helped you out. Good Luck!!!!!!

  3. Reply
    John L
    February 11, 2011 at 2:40 pm

    The late payment in 12/06 (if you are talking a 30 day late as opposed to didn’t make it on the first or after the grace period) will hurt.

    However, was there are reason for this late payment? Something beyond your control?

    I am not familiar with Texas state law, but it may be worth while to look into an FHA loan. The rates on an FHA are typically lower (6.25% – 6.75%). The closing costs are dictated by FHA, so there shouldn’t be any wildy fluctuating costs.

    FHA also will allow up to a 95% loan-to-value. Since this is a federal program, you will want to check and see if the state of TX has any rules that overrule this.

    Also, many lenders or local banks, do not have this program, so it may be worth checking around.

    visit my site or my blog for more information on this subject.

    Good luck!

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