Sounds like you are in an adjustable mortage with a pre-pay. OUCH. When you get your next mortgage, you can have a no pp (pre-pay), it may cost you .25 to the rate, but try and get a fixed rate - if the payment is not too high (ok) saves you refinancing again down the road. Fixed rates are normally higher, if you have a lower credit score...but you can get one, and not have a pp or have the rate going up again in 2 - 3 yreas, than if you decide to refiance - you will not have that pentality. But, if you decide to go another route, there are other programs available. For instance:
There are also, interest only loans - adjustable loans, option arms (where you pick the payment, from 4 payments, including interest only). Interest only are lower payments, but nothing is being paid on your home. Some self-employed ppl like the payment options, in a lean month when money is tight., they can pay a lesser amount.
Now - -
There are other factors to consider, besides credit. Medical Bills are over looked by underwriting (since medical expenses is a un-forseen event), where as credit cards, are looked at (since you purchased items on a credit card.)
All is not HOPELESS - ok - take a deep breath. If your credit score is 500 or higher, anything is workable.
Lenders look at the middle score...of the 3 scores. If you only have 1 score or 2 scores (have seen it), it is still workable....but unless a lender sees the whole picture - credit - income - job time, etc - than you will not have a "true" picture of what your options are. Hope this helps -
Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score.
Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.
Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information.
Wanda Ellis, Branch Manager
Charterwest Mortgage, LLC