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Hard time getting refinance with cash out

Loan scenerio.House appraised at 280,000,i owe 183,000,credit score 700,dti is high due to credit cards(80%).annual income 30,000.Co borrower 200,000 annual income,760 credit score, 60% dti.Im trying to get cash out to payoff cc.Current bank refuses to give me cash out but willing to refi current balance.Makes no sense cause if they gave me cash my dti would drop significantly.Do i have any options?
  • October 28 2012 - Maywood
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Answers (9)

Your dti MUST qualify based on the standard.  If your DTI is still too high after the cards are paid off, typically not much can be done.  It certainly seems counter-intuitive that the same lender wouldn't want to put you in a better situation than you are in, but not when you think about it from the standpoint of they very likely have already sold your loan to Freddie or Fannie and now are just SERVICING the loan (which means they have no risk).  If they re-finance you and it no longer is eligible to be sold to fannie or freddie because the dti is too high, well then now they own your loan for life (which they definitely don't want to do because it's money they can't lend out, essentially).   So it's not as simple as "why wouldn't you want to better my situation?"


In your case, your house appraised at 280,000, which likely means you can borrow up to $224,000 on a cash out (conforming), which should knock out about 35k - 40k worth of credit card debt, or $238,000 (fha), which would knock out another 9,000.  Sounds like a great proposition if you can qualify!   FHA might be a better bet because it will often allow for higher DTI, they are more expensive than conforming though.

Feel free to click on me and get in touch if you'd like another set of eyes on it.   I'd be happy to try to figure it out for you.  It's not uncommon for one lender to approve another's denial.   And we can figure out if it will likely work or not before you order another appraisal or have to invest more money in it.   
  • October 31 2012
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Cancelled signing with current bank.So im back on "what are my options"
  • October 30 2012
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Hey Joe.Read my post again.

  • October 30 2012
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Something does not seem to add up.  You make $230k per year and only need about $15-20k for the credit cards, yet your DTI is 60%.  Are you sure the people you are talking to are doing the math correctly or is there a lot of other debt that I am not taking into account.

  • October 29 2012
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Not selling.Just signed papers for a refi of existing balance.Im going to save about 200 dollars a month.Can i still apply for a heloc or hel?All i need is 15-20000 dollars.
  • October 29 2012
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Profile picture for Cindy Quinton
Why do you think you won't qualify for the HELOC?

I guess I don't understand feeling cheated.Although you have a bit of equity in the home, ultimately, it is the bank's money that you want. Couple that with the fact that the bank knows full well that if they were to have to re-take possession, or foreclose, it would cost them a fortune to do so, and the home might not be in the best shape or easy to sell at the top of its value. And they are likely looking at you and saying, "your financial situation, your problem, not ours." 

You simply can't force them to give you their money. Have you considered selling and paying things off? If you think you might consider that option, you wouldn't want to do a re-fi that will add to your balance.
  • October 28 2012
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I was thinking of a heloc but im not sure if i would qualify.I understand if the bank gives me the cash to pay off cc i could charge it all back.But if it saves me 5-600 a month i would not have a reason to charge.I mean i have equity and they wont give it to me to help my financial situation.I feel somewhat cheated.
  • October 28 2012
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Why would the bank want to increase it's exposure by allowing you to take additional equity out to pay off debt that you can charge back up?
  • October 28 2012
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Profile picture for Cindy Quinton
Can you get a home equity line of credit, HELOC? If so, does the refinance lower your payment enough to be worthwhile?
  • October 28 2012
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