[LordOpie]

If you're knowledgeable, please help...

My girl doesn't have much credit cuz she's never really needed it. Her score is low cuz of that. She's got 50% equity in her home and wants to take 20% of that in a 2nd mortgage.

She didn't qualify or a home equity line of credit. A broker suggested one of two things:
1. full refinace of home, currently, loan at 5.75%... new loan would be full amount at 7.25%.
2. 2nd mortage for just the amount we'll take at 12%.

Are these interest rates reasonable?

Why such a problem? I know her credit score is low due to lack of actually using credit, but she's got so much friggin' equity, why is anything else relevant?

 

[DirtyDog]

Don't refi the full at 7.25, that's a long term problem with no way out. If her credit isn't good and it's really your only option,, do the 2nd at 12%.

 

[Serial Midget]

Why would she need money when she's got you?

Whats relevent would be a history of paying creditors their due, no credit = no history. That or lenders sense a less than savy consumer and want to get their hooks in her.

 

[Brian HCM#1]

Shop around for better rates, they are still 6 1/4%-6 1/2% for a 30 year fixed.

 

[DRB]

Have you tried eloan or lending tree?

 

[johnbryanpeters]

Unless she's in a crisis, screw getting another loan, focus on paying off existing debt.

 

[Brian HCM#1]

Here are some rates in your area.

 

[Qman]

What does she need the money for? If she has no credit history, it probably isn't for other debts I'm guessing.
A guy at work had this problem and he went and got a credit card and bought a tv. That helped a little but it'll take time so he had to wait about a year to get the home loan. He's also a resident alien so I think that also had something to do with it.
Above all else, I'd keep shopping around. Those are pretty bad rates.
Is there a Costco near her? She might want to check with them if she's a member. Also, don't just go to banks. Check with some friends to get mortgage broker referrals. A lot of them have more products available to them than a bank. HELOCs might still be heading up for a while so if she really needs the money, try to find something that's fixed.
2nd the suggestion to try Lending Tree.com.

 

[LordOpie]

What does she need the money for?

We're taking out a loan for our wedding, honeymoon, totally re-doing the front and backyards as well as other household improvements... kitchen cabs, underground storage area, other stuff and I'm going to set up a garage in our 2-car garage... what tools, jacks, and stuff should I buy? I like working on cars, but never had an easy, efficient work area, so starting from scratch essentially.

BeerD, yeah, we're not gonna lose the 30 year 5.5% fixed. The 2nd has a three year waiting period for no pre-payment penalty. Since we'll probably pop-the-top in 3-5 years, we'll refi the 2nd mortgage then.

DRB, yeah, we're working with a guy we met through lendingtree. While the rate he's offering might be a little higher than others, he's the only one who's actually trying to earn our business. Everyone else, it's pulling teeth.

 

[splat]

We're taking out a loan for our wedding, honeymoon, totally re-doing the front and backyards as well as other household improvements... kitchen cabs, underground storage area, other stuff and I'm going to set up a garage in our 2-car garage... what tools, jacks, and stuff should I buy? I like working on cars, but never had an easy, efficient work area, so starting from scratch essentially.

Slow Down!!!

 

[Qman]

We're taking out a loan for our wedding, honeymoon, totally re-doing the front and backyards as well as other household improvements... kitchen cabs, underground storage area, other stuff and I'm going to set up a garage in our 2-car garage... what tools, jacks, and stuff should I buy? I like working on cars, but never had an easy, efficient work area, so starting from scratch essentially.

Not sure what to tell you other than don't get the loan yet. None of that sounds urgent and if it's simply a matter of no credit history, then start putting the wedding stuff on a credit card and get some history. Maybe apply once you're married...
Depends on how you want to spin it and the laws of your state. If the house is her's and stays her's after the wedding you may not want your name on the loan. If you live in a communal property state then half will become your's and it won't matter so it'd probably be best in terms of rates and fees to apply for the loan together.
You might talk to an accountant or lawyer for better advice.

 

[Qman]

If it's not a communal property state and she applies for the loan in her name, buy Snap-On and engrave your name in all the tools.

 

[mr2monster]

Shop around for better rates, they are still 6 1/4%-6 1/2% for a 30 year fixed.

Not for her credit rating... 6.25 isn't even an option unless you pay for it assuming she has as bad of credit as you say..

 

[LordOpie]

Slow Down!!!

WHY??!

If it's not a communal property state and she applies for the loan in her name, buy Snap-On and engrave your name in all the tools.

Damn! Bitter much?

I know this woman is my last and really, my first.

You might talk to an accountant or lawyer for better advice.

I appreciate yours and everyone else's advice, but keep in mind, shopping for another loan, talking to lots of people like accountants and lawyers all cost money. If not in direct expenditures, then in time -- which we value highly -- and effort.

Not for her credit rating... 6.25 isn't even an option unless you pay for it assuming she has as bad of credit as you say..

Is not using credit in the past considered bad credit?

 

[MtnBikerChk]

How's your credit? Wait until you get married and then take out a loan in your name.

 

[Qman]

Damn! Bitter much?

Funny. But no, not really, just seen a lot of people get hosed.

I know this woman is my last and really, my first.

That's funny too. I hope that's true for you but, that's how most marriages start out and I think we're still at a 50% failure rate in the US and 66% in California.

I appreciate yours and everyone else's advice, but keep in mind, shopping for another loan, talking to lots of people like accountants and lawyers all cost money. If not in direct expenditures, then in time -- which we value highly -- and effort.

That's one of the stupidest things I've ever read. If that's the case then stop shopping and just go with what you've got.
Your juvenile assumption is incorrect. It is possible to get some great advice from accountants and lawyers without paying for it. If you can't spend a little time to get some professional advice then you leave open many avenues for financial mistakes. Notice you're coming to a mt. bike forum for opinions on home loans. You don't think it might be a good idea to spend a relatively small amount of time and/or money on some education from a professional? Good Luck!

Is not using credit in the past considered bad credit?

This is what I'm talking about. Getting some professional advice will give you better answers to this question. A lot of times lenders don't look closely at WHY a person has bad credit. They just see "bad credit risk" whether the person has 'bad credit' or not. No credit usually equals bad credit unless you have a broker that can work with you on the details of the credit report.

Another thing to try is to get a HELOC through her current lender. Try their website. If anyone knows how good or bad her credit is, it should be them.
If her loan is through any major lending institution, they're probably trying to offer her one all the time.
Again, good luck.

 

[LordOpie]

That's one of the stupidest things I've ever read. If that's the case then stop shopping and just go with what you've got.
Your juvenile assumption is incorrect.

Just cuz someone's ignorant about the specifics of mortgages and the so-called "Fair Isaac" guidelines doesn't mean they're not knowledgeable in other areas. Your assumption just proves that you're quite the c0cksucker.

(no, I have no interest in attempting to be civil to this poster)

 

[mr2monster]

Is not using credit in the past considered bad credit?

Not using credit is different than not establishing credit. i.e. if she still has a credit card from when she's 16 but she just doesnt use it, that's good. (despite what a lot of people will tell you) It establishes a credit history which helps your score.

Things that detract from your credit are: late payments, collections, bankruptcy, forclosure, etc. etc. etc. Those create "dings" in her credit report... If there is no credit established, there are no dings. Her score might not be high, but it's not "bad credit"

Simply not using your credit doesn't "hurt" your credit, but your credit never increases so it could hurt your chances of getting a loan unless someone actually looks at the scenerio and sees why your score is low.

If she has no credit established, dont fret. Many times you can verify credit using non traditional trade lines and they will default you to a predetermined score (hypothetically 3 tradelines, 12 months or more, you get a 620). Things like Cell phone, Utilities, Car insurance, Rent, etc. Most of the time they will need atleast 3 (sometimes 6) lines that have been active over 12 months. (Cancled checks for paying rent for 12 months is a good one.)

If she has a good job history, makes decent money, and has no debt (lack of credit is lack of debt most of the time), she should be fine in getting a HELOC or Stand alone 2nd mortgage.

I would try her credit union first. (hopefully she has one) I can't count how many times I've been unable to beat a deal offered by a credit union. In fact, I took out a HELOC with my credit union because I couldnt even beat it for me! and I'm a mortgage broker!

If they deny her there.. then start looking for a creative broker. Someone with a slue of resources and lenders to shop. Some brokerages only have 5 or so lenders because they never sign up with the other lenders, they have the 5 that take care of most of the customers that they service and they're not very diversified. My brokerage has 3100 different lenders that we're signed up with so when i get a sticky file with some weird quarks, I can always find something to work.... it takes a lot of time, but if i need something to go through, it will.

 

[narlus]

Just cuz someone's ignorant about the specifics of mortgages and the so-called "Fair Isaac" guidelines doesn't mean they're not knowledgeable in other areas. Your assumption just proves that you're quite the c0cksucker.

(no, I have no interest in attempting to be civil to this poster)

if you think qman is wrong for lambasting you over yr statement:

I appreciate yours and everyone else's advice, but keep in mind, shopping for another loan, talking to lots of people like accountants and lawyers all cost money. If not in direct expenditures, then in time -- which we value highly -- and effort.

well, then i guess i don't know what to say.

 

[Qman]

Just cuz someone's ignorant about the specifics of mortgages and the so-called "Fair Isaac" guidelines doesn't mean they're not knowledgeable in other areas.

Wow. Fragile much?

You seem confused. If you think I was straying from the subject and questioning your ignorance of subjects other than mortgages et al, you're wrong. My comment about getting some education was related to paying a lawyer or accountant in money and/or time to educate you more on the subject. I look at the amount I've learned from various lawyers and accountants over the years as education and the relatively small cost as tuition.

Your assumption just proves that you're quite the c0cksucker.

(no, I have no interest in attempting to be civil to this poster)

My only assumption so far is that you have less intelligence than the average person. This is proven in this post and several others. Namely, the one where you rant about getting put on notice for surfing RM at a new job.
So is it that my assumption proves I'm a cocksucker or that my assumption is stating the obvious and that makes me a cocksucker? Either way, no civility is required. I see this as entertainment.
Now then, try and stop thinking about cocksucking and look at my last post. Here it is again if it's too far back for you:
Tell your mate to go to the website of her lender. Surf around and see about applying for a HELOC,2nd, or refi through them. Of the times I've refi'd, that was the easiest and cheapest way to do it.

Thanks for the amusement and good luck!