Drowning in Debt? A ReFi Can Help

When a homeowner’s overall debt grows to an unmanageable level, refinancing their mortgage can be one way to address the issue. But there can be a sticking point: a low credit rating and a high loan-to-value ratio.

That’s what Erlinda Kearns learned when she contacted several mortgage companies. She was discouraged until Christopher Decker, a Reliance First Capital Mortgage Analyst, called her in response to information she submitted online. With a little extra work, Decker was able to provide Kearns with a mortgage that saved her hundreds of dollars each month.

Dealing with debt troubles

During the last six or seven years, Kearns, who resides in the Seattle, Washington area, experienced a handful of life-changing events which caused her to rack up serious credit card debt. While dealing with cancer herself, she also supports her boyfriend who faces health issues. In addition, Kearns, who emigrated to the U.S. from the Philippines, sends money overseas to family members every month and even traveled there after the typhoon in 2012 to help her family recover.

In all, Kearns found that her credit card debt had grown to an unmanageable level, nearly $35,000. “I know it’s my fault but I didn’t spend lavishly,” Kearns explained. It had simply gotten out of control and her $1,700 monthly mortgage payment wasn’t helping.

Kearns decided to look at refinancing her mortgage to see if a lower interest rate could help her decrease her monthly mortgage payment. She contacted several mortgage companies, but didn’t get far; in fact several didn’t even return her calls.

Running out of options, Kearns decided to take her search online, something she never considered doing before. One company she spoke with offered her a low rate before finding out about her situation. After she completed the initial application with that firm and paid for an appraisal, she found out that she would end up with a higher rate and have to buy mortgage insurance, resulting in no savings.

“I had friends who had a low interest rates,” says Kearns, who was starting to get discouraged. “Why can other people get help and I can’t?”

Finding a helping hand

That’s when Kearns heard back from Reliance First Capital Mortgage Analyst Christopher Decker. He provided her with information about himself and Reliance First Capital, telling her he would review her case and present her with a variety of options.

“He followed through in a way no one else had,” Kearns says, explaining that Decker wouldn’t give her any guarantees or promises but reassured her that he would work hard to see if he could save her money. He kept her informed during each step of the way, calling her with regular updates. “He was there all through the entire process,” she said.

In the end, Decker was able to craft a mortgage program for Kearns that paid off her card debt and produced an overall monthly savings of many hundreds of dollars per month. The new mortgage has provided Kearns with savings and she isn’t using her credit cards much anymore.

“After piling up so much credit card debt, I learned my lesson,” Kearns says. “Chris Decker saved me a lot of money and now he’s like an old friend of mine.”

Important notes: If you choose to refinance with Reliance First Capital, results will depend on your specific financial situation and credit background.

The amount of any savings from refinancing will depend on the difference in interest rates between your existing and new loans, the amount of any cash back or financed closing costs, and the amounts of the existing and new loans.  Part of the reduction in payments may reflect extending your loan term, which may also result in a higher total amount paid when compared to your current loan. Also, on many revolving accounts, the balance would have been paid off in less time than your mortgage and the minimum payment would have declined every month.  If your existing loan includes a pre-payment penalty, the cost of paying the penalty may reduce or eliminate the benefit of taking out a new loan.

[cta]Looking for a lender who will give your application the attention it needs? Contact your Reliance First Capital (NMLS ID #58775) mortgage analyst, Larry Karpen (NMLS ID #58775), at lkarpen@reliancefirstcapital.com or (516) 422-8816, ext. 1.[/cta]