It is okay per FHA guidelines, but the problem is that the vast majority of lenders have instituted what we call "overlays" which are their own stricter guidelines. I know I tried to do an FHA and a VA streamline about 3 or 4 months ago which had one 30 day late payment in the past 12 months and I couldn't even find one company who would do the loan because of that. I'm sure that their must be a few out there somewhere who are still allowing this, but they're tough to find!
Mathew, Most lenders are now requiring that there be no late payments in the past 12 months, to get approved for an FHA streamline. So, once you get 12 months with no 30 days lates, you should be okay. However, if you want to do a streamline with no appraisal, the only thing that can be financed into the loan would be your payoff balance. That means that either you or your lender will have to pay all closing costs, pre-paids, etc. because they won't allow them to be rolled into the loan anymore without an appraisal. Good luck to you!
I have spent 15 years working with clients on improving their credit scores, and based on the limited information about your credit, here's what I would advise. First of all, if you only have one active account, a student loan, then you need to open at least one small revolving account to help give the scores something else to report on. It's actually a negative in credit scoring, not having any revolving accounts, Crazy, huh? Now, here's the important part, Once you get the credit card, never let the balance get above 20-40% of the total credit limit. But, at the same time, be sure not to pay the card down to a zero balance, or you won't get the full effect of having the account. As for the comment about paying a collection and having it hurt your score, here's how that can work. It's like the scoring system has a memory. If you have an old collection, let's say over 3 years old, it's like the scoring system has begun to "forget" about the collection because there's been no activity on the account for a long time. Then, if you go and pay off the collection, there is now new activity on the account and the scoring system says, "Ah, I remember that old collection, I almost forgot about it! I think I'll smack the score down for that!" Again, crazy, but true! Now, if the collection is more recent, like within the past 12-18 months, my experience has typically been that paying it off will improve the score. So it's a fine balancing act when determining what needs to be done to improve the score. You always want to pay off any judgment though, because these have to be paid to get any mortgage. You really do need to speak with someone in the lending industry who will take the time to review your report with you and advise you specifically about what to pay and what not to, Best of luck to you!
If you can show that there was some very specific reason for the lower income in 2009 (such as a large, one-time purchase) then the underwriter may consider some modification in how the income is calculated. Other than that, it's going to be tough to get them to not average the 2 year's income. Again, though, you need to have someone who is experienced in calculating self-employed income (and sadly, not all loan originators are) review your 1040s and business returns, if you have them, Make sure you supply all of the schedules so they can accurately determine how much income can be used,. Best of luck!
You really need to get a reading on what the current value of your home is to answer those questions. If you do an FHA loan, you can finance up to around 97% to consolidate your two mortgages. If you roll the closing costs and pre-paid expenses into the loan (taxes, insurance escrows, etc,) then that means your mortgage amount will go up, so the amount of equity you have will decrease. As for being able to purchase another home, it depends on whether you're planning on selling this one and then purchasing another or what. If you're planning to sell in the near future, you're going to be using up some of your equity (most likely) by doing the refinance. Feel free to email me if you have more specific questions.[Email address deleted by Zillow Moderator]