Should I do a no-doc mortgage only in my name vs both of our names?
My husband and I have a first mortgage with a 6.5% arm that will start adjusting up in September. We have a second mortgage at 10.5% that is fixed. The total balance is around $ 455,000.
We have two refinancing options on the plate right now:
1) Our credit union can refinance our first mortgage at 7.5% fixed for 30 years, but not the second mortgage (They don’t do mortgages that big). It will increase our monthly payment by $ 300 to $ 400/month and the new mortgage will be in both of our names. We can handle the increase without a problem.
2) A Mortgage company will refinance BOTH mortgages into 1 mortgage at 7.5% and our payments would stay the same, BUT the mortgage would be in my name only because his FICO score is mid 500’s and mine is around 715. He makes twice the money I make, so they would put his score first if he was on the loan, too. It would be a no-doc mortgage, so they would not know my income, which is half of his.
Any down sides to Option 2? I’m worried.