My husband and I need to refi. But our credit is really bad. Both under 500. We have a line of credit for 10,000, that we have been late on for 3 months and are about to be sued over this. It is with Beneficial. We are afraid of losing our home. I went through a about of cancer in 05 and didn't work for 1 1/2 years. With medical bills piling up, we are behind on a lot. If we could just have the line of credit rolled into our house payment at the same rate, we could probably do it. Our line of credit interest is over 20% and it's killing us! I don't know what we can do at this point. Is there any way out of this?

Thank you

Kim Moore

Talk to your current mortgage lender as well as lots of others. However, with your credit history, you are probably looking at a higher interest rate.

Yes, there are ways that you can get out of it. There are many lenders out there that will refinance you, though not many are not score driven lenders. The biggest thing you need to consider is ways that you can improve your situation in a rapid time frame. As ScottGem pointed out, you are likely going to pay a higher interest rate than you would if your credit scores were higher. You definitely need to get out of the line of credit, it's a revolving account which means the 20% is more expensive than if it were 20% on a closed end term. If you do refinance, I would suggest a plan to pay off your other debts in such a way that your credit scores will improve and look to refinance again in 2-5 years as yours scores improve.

Good luck.

Thank you for your responses! How do I know what kind of lender to search for. Since we do have bad credit. We bank with Chase, but I'm afraid we wouldn't qualify for them. I am in Ohio, do you have any advice on lending companies, with my situation being what it is...

Have you talked to Chase? Since you have a relationship they may work with you. Can't hurt to ask. You can try LendingTree.com or eloan.com

I would first talk with Chase and see if they are willing to refinance you. They do have a subprime division, and may be willing to help. Not sure if I would start with Eloan or Lending Tree. They have arrangements with a limited amount of lenders and when you apply they will send your application to 10-12 lenders each for a preliminary approval. The risk in this is that each lender will pull your credit and with that many inquiries, if none of the say yes, it will make it more difficult to borrow from another lender. Underwriters can and usually will "pucker up" when they see that someone else did not approve you, and they will be much more conservative because of it. I would suggest talking to 3-4 Mortgage Brokers. Explain your situation to them, including your scores, the amount you owe on both mortgages, and the appoximate value of your home. I would not fill out an application with any of them immediately. Ask very specific questions of each of them and gauge their responses. There are quite a few lenders that will lend to you, even with your credit scores, but it is very important that the broker you eventually work with has an active and good relationship with those types of lenders. Many brokers say they do, but then will later tell their clients that they cannot get their loan done and will refer the client elsewhere. You don't want this to happen, because it can have the same negative effect as what I was describing with applying with Eloan or Lending Tree. The reason you want to use a broker is twofold. One because they will only pull your credit one time, and then share your credit with any prospective lender. That versus each lender pulling your credit individually, and potentially decreasing your chances of finding a loan that resolves your problems. Second, because most brokers are able to use well over 100 lenders, and will know which will lend to you, instead of you trying to find the right one on your own.

Do talk to Chase first. They might just help you without the need of a broker. If not, find a broker you trust. Just make them earn your trust before you leap in with both feet.

Good luck to you.

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Originally Posted by macy98

My husband and I need to refi. but our credit is really bad. Both under 500. We have a line of credit for 10,000, that we have been late on for 3 months and are about to be sued over this. It is with Beneficial. We are afraid of losing our home. I went through a bout of cancer in 05 and didn't work for 1 1/2 years. With medical bills piling up, we are behind on alot. If we could just have the line of credit rolled into our house payment at the same rate, we could probably do it. Our line of credit interest is over 20% and it's killing us! I don't know what we can do at this point. Is there any way out of this?

Thank you

Kim Moore

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With credit that bad, you may want to either look into really generous subprime lenders or hard money lenders. There are steps you can take to fix your credit. I can refer you to an outstanding company if you like or, since it sounds like you may not be able to afford them, if you contact me directly I can go over a few things you can do to start fixing your credit. Good luck

Dear macy98-I respectfully have a different take on your situation than the previous posts. You stated that medical bills and others are piling up, which indicates that the high rate on the credit line is not the only problem. I would suggest that you seek the counsel of a trusted friend (without a vested interest), who is astute in financial matters, and take a comprehensive and dispassionate look at your situation. It may well be that the sale of your home or even a Bankruptcy would provide the best long term solution to your problems. Even though I have been doing residential mortgages since 1983, I often advise clients against a poorly thought out refinance. My personal and professional opinion is that there is no such thing as a generous sub-prime lender. If you are able to find a loan, I guarantee that it will be ugly, and will probably provide but short term relief from your problems. I wish you the best.