Subprime Loan

Don't go with a lender who uses the FICO score if you're thinking about refinancing your mortgage.

QUESTION: Jennifer has a subprime loan and asks what the steps are in refinancing. She makes $75,000 a year and the mortgage balance is $118,000. They have paid the mortgage payment on time or early since they got the loan 10 months ago. Dave says it starts with not using a lender who uses the FICO score.

ANSWER: If you’ve paid your mortgage on time or early since you’ve had this loan, that’s good. Don’t go with a FICO score lender. Most mortgage companies use the FICO score to make the decision, but what you want is a company that does manual underwriting, meaning they actually look at the people who are applying for the loan. As quickly as you can refinance, do it. If you can’t do it now, ask them when the earliest is that they can do it.