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Getting equity out of refinancing a VA loan with bad credit

After my divorce is final I will need to buy my ex out. I will have to pay her 60,000. I yet own 166,000 on our home. We had two realtors that stated it was worth now 250,000-260,000. Here is my issue, my ex didn't make the last 4 payments on our van dropping my credit to 501. I have sold the van and paid the loan in full since. The loan I have now on the house for the past 6 years is a VA loan through Bank of America in which I've never had a late payment. Maybe I could do a second mortgage instead? Any advice would be helpful. by josephgfowles60 from , California. Apr 27th 2015 Reply


Maureen Martin (MaureenMartin)
#874 ranked lender in California - 9 contributions

Unfortunately a 501 score won't allow you to obtain any type of traditional financing. I would suggest that you connect with a credit repair specialist to see if you could remove those lates instead to bring up your current score. Being that you're VA eligible, that should open the door for you to take the cash out that you need once your scores are up, assuming that your debt to income ratios would qualify as well. But again, you will need to bring your scores up. You're welcome to email me for a reference for a credit repair person. All the best!Maureen MartinMMartin@JMJFinancial.com

Apr 27th 2015
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Tim Carroll (TimCarroll)
#876 ranked lender in California - 34 contributions

Hi Joeseph,Unfortunately, Maureen is correct. If you'd like another credit repair company to contact, I can refer you to a service that several of my clients have used in the past with success. Don't hesitate to email me if you'd like the information.Good luck!Tim Carroll (tcarroll@cmgfi.com)

Apr 27th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

You'll need to wait or take other steps to improve your score (such as pay down credit cards if any balances are over 30% of the limit on the account). Especially for a cash-out loan you'll likely need to get to the 600-620 range at a minimum to get VA financing and that is likely the most flexible option you'll have other than finance companies or similar. Now that the account is paid off your score may improve significantly in a short time - but being 120 days late will be a challenge for your credit for a while - possibly for a full year.

Apr 27th 2015
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

You're going to have to vastly improve your credit score to obtain any type of conforming financing.. and a 2nd or HELOC will never happen with scores that low.. I would wait a month or 2 for the car loan to show paid on your credit report and see where your credit score falls then... if your still below 620, then try contacting a local mortgage broker and let him analyze your credit report.. he has resources where he can guide to the necessary steps for the fastest and best credit score improvement.. Avoid the big banks or internet lenders.. they are not trained in assisting borrowers with credit repair.. if your score is not sufficient at the time of application, they will just turn you down.. they will not help you fix anything.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Apr 27th 2015
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Antonio Magtoto (amagtotojr)
#858 ranked lender in California - 36 contributions

Joseph, I can help you with a traditional solution not private money or hard money. And we can still use a VA loan to help you get the terms you need to meet your obligations. Unlike many of the other lenders we can do both FHA and VA loans as low as 500. One of the criteria has to be clean mortgage history which you have. If you would like to discuss further contact me. Have a Blessed Day and thank you for your service.

Apr 27th 2015
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