Refi??? New loan??? Possible???

[battles4610]

DH and I did a lease-option in 9/2007 for $169k on a home appraised for $180k. We weren't able to obtain a mortgage on our own when the 24 months was up, so in 10/09 we basically entered into a 3 year, interest-only loan with the private individual in hopes that this will buy us enough time to improve our scores which are very low...high 400s. The mortgage is filed with an escrow company.

 

We are wondering if this would now be considered a refi? We owe $151k, so our loan to value ratio is 84%. Is there anyone who would be willing to look at us? The couple who built the house would really like to have their cash and we would like to be on our own with the house. It would also be really nice to have the $8k for the tax credit in my pocket rather than paying it toward the balance as was required in the new contract.

 

We have a perfect payment history on the house. One auto loan at $275/month with some 30 days late. A BK7 discharged April 2007. There are some medical collections, a cell bill, and a couple of CC charge offs on our credit report. Yucky, I know. We were so going to be those people who got it all together after our BK. We tried, but DH's layoff x 2 was unexpected and devastating.

 

We really need to stay in this house. We would never be able to save up a downpayment that would equal the equity we currently have.

[Imgettingoutofdebt]

I just wanted to say I understand your current situation, and I'm in a rent to own right now, but I'm considering buying my home by June 2011. You were able to get a mortgage after 2 years correct?

[battles4610]

No, not with a bank. We renegotiated our contract and set it up as a 3 year interest only at 6.25% to buy us some more time.

[Imgettingoutofdebt]

Where the people willing to work with you? Was it an issue when you set it up with the lender or was it through the realtor?

[battles4610]

It was not too much of an issue as we had, in the original lease/option contract, an agreement that they would offer financing if we were unable to obtain our own mortgage. They are getting ready to retire and would like to have the cash for this property rather than carry a mortgage, but they are still willing to extend financing to us if we are not able to go out on our own after 3 years of an interest only contract.

 

These are really good people who I trust completely. I would just like to be able to go out on our own and let them have their cash.