A short refinance is when a lender accepts less than what is owed on the mortgage to allow the home owner to refinance. Will A Short Refinance Damage My Credit? It depends; unfortunately this question has both a Yes and No answer. The short refinance could show up on your credit as Settled For Less Than Full and may drop your scores 50 -70 points. But in actuality most lenders will report as "Mortgage Paid" after a short refinance, which will actually increase your scores as it has no negative impact, but it all depends on your lender.
I consult with people and have literally hundreds of questions that come in, questions that I answer and that give me a perspective on this problem. Okay, so now that you know my credibility, let's talk about this issue. First, let's address credit card companies. Credit card banks often will raise your interest rates based upon your credit score, or the change in your total indebtedness. That means that even though you pay on time, your interest rate may rise. I have seen rates 24% to 29% and occasionally even higher. These are default rates but they trigger even when you do not default. If you just accept these high rates, you will be doomed to paying forever unless you get a sudden cash windfall. The fact is that so little principal gets paid that it takes many years to make a dent in your credit card balance.
How Long Will The Process Take? It depends on your specific lender, but normally you are looking on about 30 - 45 days. The key is to make sure you give the lender everything they need in a timely fashion and continuous follow up with your lender on a daily basis. What Will I Need To Qualify? Once you lenders give you the go ahead to start the Short Refinance procedure, then it's just a matter of getting qualified for an FHA Loan.
So this initial "this is the best we can do" from the credit card companies is just a start. If you know how, you can do a lot better. Now let's address the mortgage companies. They have another problem. They are losing money and yet they have to staff up to handle the huge number of loan workout requests and short sales and so forth. The fact is that you have people there who can handle 100 cases who have 1,000. So they will not pay attention to you unless you are very good at making your case, and you have a complete file with all the papers they want.
I'm not saying that you can't get somewhere just by calling. But you will get the standard loan workout terms, which usually call for you making a good faith payment on any delinquent balance and paying back the rest of your late payments over time. But what if you want an interest rate reduction, or other change in your loan terms? What if you owe more than your house is worth? There are things you can do here, but you have to be prepared to go to higher levels at the mortgage lender. You have to know what they are looking for in terms of paperwork and documentation.
I consult with people and have literally hundreds of questions that come in, questions that I answer and that give me a perspective on this problem. Okay, so now that you know my credibility, let's talk about this issue. First, let's address credit card companies. Credit card banks often will raise your interest rates based upon your credit score, or the change in your total indebtedness. That means that even though you pay on time, your interest rate may rise. I have seen rates 24% to 29% and occasionally even higher. These are default rates but they trigger even when you do not default. If you just accept these high rates, you will be doomed to paying forever unless you get a sudden cash windfall. The fact is that so little principal gets paid that it takes many years to make a dent in your credit card balance.
How Long Will The Process Take? It depends on your specific lender, but normally you are looking on about 30 - 45 days. The key is to make sure you give the lender everything they need in a timely fashion and continuous follow up with your lender on a daily basis. What Will I Need To Qualify? Once you lenders give you the go ahead to start the Short Refinance procedure, then it's just a matter of getting qualified for an FHA Loan.
So this initial "this is the best we can do" from the credit card companies is just a start. If you know how, you can do a lot better. Now let's address the mortgage companies. They have another problem. They are losing money and yet they have to staff up to handle the huge number of loan workout requests and short sales and so forth. The fact is that you have people there who can handle 100 cases who have 1,000. So they will not pay attention to you unless you are very good at making your case, and you have a complete file with all the papers they want.
I'm not saying that you can't get somewhere just by calling. But you will get the standard loan workout terms, which usually call for you making a good faith payment on any delinquent balance and paying back the rest of your late payments over time. But what if you want an interest rate reduction, or other change in your loan terms? What if you owe more than your house is worth? There are things you can do here, but you have to be prepared to go to higher levels at the mortgage lender. You have to know what they are looking for in terms of paperwork and documentation.
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