First post ... advice for our unique situation pse

mcwyuma · Joined: 08 Jan 2007 Posts: 2 Location: Yuma, AZ

Hi all,

Pse forgive this post, for it will be long. So many details, so little space <sigh>.

Ok, where do we start? First off, I came here (the USA) back in '97, set my roots in Texas and lived there for 8 yrs plus. Although I had taxes taken out of my pays, I was not technically allowed to work here in the US, so could not get a SSN, nor could I file tax returns. I have no credit history here in the US (nada, zip, nothing to say I was here --- financially, anyway). I met a lovely young lady, quit my job, moved to Arizona to be with her. We married early '06, and we filed my Immigration/citizenship papers a few months later. Very recently, I rcvd my SSN, work permit and now even my Green Card, so I only have a very short "legitimate" work history of a few months, even though I held a very stable and secure position with a small company for 8+ yrs back in TX. The difficulty to verify this stable employment is issue #1. My present employment is working out very well, and I definitely see myself being with this company for several more years, at least.

Next up, our condo. My wife purchased our condo almost 2 yrs ago (at the same time I moved here). Only her name is on the title. Now that I have a real SSN, we are moving forward on several fronts in adding my name to her accounts, but to date have done nothing. (Hopefully this will start happening this week, by adding me as an authorized user to her c/cards.) Currently I have no credit history at all with any of the CRA's.
We/she owes approx $87k on the condo, latest valuation (courtesy of an enquiry made by Wells Fargo) is around $185k, so we do have almost $100k equity (~53%, give or take).

Next, our income. We have 4 sources of income presently : (1) my wife's part-time work at a local high school. Difficult to verify employment because teachers here are contract-based by the school year (9mths/yr). She did this same teaching 1996-2000 (five yrs), took a break, and has now returned to it. Only paid a stipend. Six years experience in this kind of work, but includes a break of several yrs = an issue for lenders.
(2) Child support for her youngest child. We will stop rcvg this in approx 16 mths (when the child graduates high school).
(3) Social Security for the same child. Again, we will stop rcvg this when she graduates high school in ~ 16 mths.
(4) My full-time employment. I only have 4 mths of "verifiable work history" available under my Social Security number. Like I said earlier, I do have a solid, stable work history, albeit not entirely LEGAL.

My wife's rating is ~660 presently : no lates on her c/cards, one old bankrupty from 8.5yrs ago (divorce), two very small collections are apparently on her report ($120 and $60, so we will take care of those to get them off). Otherwise, not too bad. Not great, but not bad.

PLUSES : Great equity in our home
MINUSES : Our work histories, my lack of ANY credit history, our income level dropping significantly mid-08.

GOAL : We want to refinance our 1st mortgage, consolidating our c/card debt and auto loan with it, and taking out some cash on top. Aiming for a refi of ~$122k (66% DTV, retaining 34% equity).

What are our chances? What REPUTABLE refi companies should we be looking at/talking to? What do we need to watch for?

Any feedback or advice appreciated sincerely. Cheers,
MCW

CA_Mortgage_Planner · Joined: 06 Jan 2007 Posts: 34 Location: Northern California

Although your situation sounds fairly complicated, I don't think you should have too much trouble given her credit score and the amount of equity you have in the property. Since she has worked for the schools on a contract basis, she would be considered self-employed and since she has been doing it for so long, there should be no issues here.

The social security and the child support shouldn't be an issue either since you currently are receiving the money.... the bank doesn't ask when you will stop receiving it.

Your work history and credit may be the only hangups. There are banks that I work with that do alot of exceptions for all sorts of situations, so there would be no harm in shopping this. At worst we can do this as a no-doc loan where we do not tell any income information, but you should still qualify for it.

What is the current interest rate that you are paying on that mortgage?

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

Well, you have definitely identified the issues that are going to be most prominent.

Her score is mid-range which gives you some flexibility. Depending on the pay history and amount of the trades, you may have several options or very few.

Every piece of income is going to be questionable. If you put her in as self employed they are going to want a 2 year history. Since she likely did not file taxes for the last 2 years, and was not employed for the last 2 years on a contract basis, this is going to be extremely tough to use. On some loans, you *might* be able to get beyond this with a good letter of explanation. In other words, why was there such a large gap of employment.

Both the child support and social security you can say goodbye to. The lender *will* require you document both of these in most cases, and with the fixed income dropping in just over a year, neither of those will qualify (36 months + is what you're looking for.)

Your income has the issues you've listed. Being unable to verify your source of income can make things...difficult. Not necessarily impossible however, and would depend entirely upon the loan type you were looking at. Again, just as above, with sufficient explanation there may be some bridges that can be made.

A no-documentation loan would likely be the best bet for you. At that point you are looking more heavily at the credit requirements (which would depend on the individual company) as far as score, tradelines, any derog history, etc. The next thing you would need to evaluate is if it would make sense to do. Most likely it still could, depending on the cost of your credit cards and auto loan, but don't assume that you'll be at a 6% interest rate. No Doc loans are higher risk and as such they come with higher cost, either in points or in rate. Try to evaluate what your goal is with the refinance, and if you have a pretty low rate on it, consider an alternative with perhaps a 'waterfall' like effect of paying off one credit card after the other. This may actually save you a lot of money in the long run, rather than refinancing your 3 years left of auto loan into a nice long 30 year payment.

mcwyuma · Joined: 08 Jan 2007 Posts: 2 Location: Yuma, AZ

Thx for the replies, guys. Yes, I'm certainly learning a LOT in a very short period. The reluctance by lenders to let a new US Permanent Resident borrow is one of them. I understand completely the higher risk = higher interest rate formula.

We have been extremely fortunate so far in our search. We have two formal offers and one more pending (still in underwriting, should hear back Monday evening). One is a no-doc @ 6.75%, the other is based on my wife's name and credit history and verifiable income at the present moment @6.125%. Both are full 1st mortgage refi's with debt consolidation and some cashout, still leaving us at around 32% equity after all is said and done. After Monday's call is entertained, we'll order the appraisal and move forward assuming all goes well.

I will be sure to revisit this board --- looks like a WEALTH of knowledge and experience here. A glossary might be useful to newbies to understand some of the acronyms and terms in order to decipher or translate some posts but the knowledge base is wonderful. Keep it up, guys!

Cheers,
Mike W.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

I've actually been considering something like this for my own business as well, as a kind of FAQ handout type thing.

This may yet come to the forums soon :)

I'm glad to hear you have a couple of potential options. One recommendation I would offer is that you should ask to see the commitment from underwriting. This would detail what the requirements are for the invester to lend you the money.

One thing I've learned in this business is to never take someone's word for it :) See it in paper, from the people giving the money, or it's not worth anything. I go over the commitment letter with all of my borrowers so that they understand what is required of them, of me, and that they actually will close as long as those conditions are met.

Also, you'll want to get your good faith estimate and truth in lending statement so that you can review the fees as well as the term of the loan. Don't accept an ARM unless you are comfortable with what the payments may become when it starts to adjust.