 | Bad credit, depreciating 2nd home, 620ish FICO...? |
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Question: Bad credit, depreciating 2nd home, 620ish FICO...?Would getting into a sub-prime, interest only mortgage for 3-5 years suffice for rebuilding credit, payoff some debt, lower payment make sense? Additional DetailsThanks everybody! I should add that it is not me in this situation but rather a client of mine. He's currently paying out of his *** for a home that's losing money ($4k/mo, 9%) and it's worth much less than what he bought it for.True, you cannot fix anything until you adjust your lifestyle and credit is no exception. My goal here is to get my client to see the light, point him in the right direction, and get his *** in gear. He's 63 and plans to retire in about 1 year to the subject property. Getting a lower payment is my primary goal. If all goes well he pays this mortgagge on time and in 2-3 years get him to invest in other properties.
Answer: -Depends. Can you pay off ALL your bad debts? Will the lower payments really be affordable? Will you change your spending habits?Too many people go into subprime loans thinking they'll come out 2 years later all better. But they fail to make any changes to their lifestyle, and more often than not, they max out all the credit cards they just paid off, and are in worse shape in 2 years.So think about what will really change before you make your decision. -Everyone seems to be missing one VERY important thing!!! If your home is in fact deprieciating, Do Not do a Interest Only Loan. with a 620 you are still in the realm of help as far as lending is concerned!!! do not wait to much longer to do this and if you are going to again i will say dont do an I/O. if prices continue to decline in your area you may end up oweing more than it is worth and be stuck when the loan re-sets. your better off refiancing with your current lender and working out details to pay off the debt. Remember every lender has fees so dont use a broker or lender..... use the one you have and they will work with you just be persistant. Good luck to you and hang in there!
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