Should I remortgage my house to pay of my credit card debt? My adviser says I should..?
537669
When you owe money, creditors get good at collecting. It my take a while, but they will come after it. Having said that, if mortgaging your house means you will have lower monthly payments to allow you the breathing room you currently need for your new business - it MAY make sense.\n\nUnderstand, lower monthly payments, just means lower payments, not lower overall cost. With a mortgage, the total dollar figure can be quite large - especially when you factor in fees.\n\nIf you can get an alternative loan, at a reasonable rate, consider that - it is a good idea to keep your business affairs separate from you personal.\n\nGood Luck!
962158
You may want to consider a combination of refinance to payoff the debts and a room mate to cushion the load.\n\nHere is some additional info. Hope this helps.
68960
Maybe.\n\nWhat lenders want is assurance that you can pay back the loan as agreed.  So, a lot will depend on\n\n1.  Income Tax filing for the last 3 years\n2.  Pay Check Stubs for the past 3 months\n3.  Longevity of employment\n4.  Debt / Income ratio\n\nYes, the credit report carries weight, for it says something about your debt load, and your payment performance in the past.  But, it's not the only thing that matters.\n\nMy advice is this.  Contact a real estate agent who has contact with many lenders.
839409
Dazed and Con has some very valid points. I would like to elaborate on them. Personally, I don't believe in the "rent to own" - it is a load of crap that doesn't give you any tax benefits. If you are able, take out a 5-year interest-only fixed loan. By that time, you will be out of school and can refinance the property. You should have built up enough equity by that time to not have to worry about a negative amortization. You can pay down the principal during this 5 year time if you wish. When you re-fi after you are out of school and working, you can roll some of the student loans intot he re-fi if you fix the house up enough to get a good high appraisal. This way, all of the interest including your student loan money would be tax deductible. This brings me to the last issue. Are you prepared to pay back student loans plus Uncle Sam after you graduate? If not, then having a house that is yours, not some "rent-to-own" nonsense, will give you the type of write-offs you will need to cut down or eliminate those tax checks. If the landlord is not willing to sell the house to you under a true normal sale scenario, then he/she is not serious. You never said whether or not you have a down payment. If not, then the rent-to-own may possibly work if you have an iron-clad conract with regard to your down payment coming from your rental payments of 4 years, an end date to the time when the property will be put into your name, etc. Take any rent&#92;-to-own contract you end up with to the local court house and record it against the property to stop anyone from selling it out from underneath you. Sorry to be so cynical, but I have seen many a rotten landlord on these. Buy it outright if you can.
50653
if you intend to stay in a property for a short period of time, then an ARM could still be a good deal. if you intend to stay 5 years or longer then a fixed loan would be better. a sharp rise in an ARMs could occur and force people into negative amortization. it is better to know what your costs will be in the future, then worrying about being homeless because of an interest rate spike!\n\njust my opinion. i have done it both ways in the past and was uncomfortable with the ARM going higher.
1084497
yeah, but it would be silly for small stuff like that. Try getting a "sears" or "lowe's" card first- you should be able to get a high enough credit line from them to buy those things, because refinancing your home, getting a second mortgage, is going to cost you MUCH MORE over the years when you are paying it back.
846006
I work at a loan office. You're credit rating alone has you covered. Beside, no balance is way better than an unpaid balance. As long as you have more cash flowing in than going out it's not that big of a deal. But if it couldn't hurt to re-open that one. You never know when you may need it. Good luck!
763081
Hey Jennifer,\nIt sounds like you should definitely get out of that mortgage, 11.2% is awfully high. However, what is the reason that you had to take an 11.2% loan with a prepayment penalty? It sounds like a sub-prime loan product that you are currently in. Did you have a recent bankruptcy, foreclosure, etc? Is the credit bruised? Why are you in that situation?\n\nAs far as whether or not it makes sense, this is what I recommend:\n\nGo to a few different mortgage lenders. Have them pull your credit and pre-qualify you. Figure out what kind of loan program and interest rate you can get, then do the math from there. Take into consideration how much you will have to pay to get out from underneath this loan, add to that number the amount that your prepayment penalty is (they're usually one percent of the original loan amount). Then, divide how much you will save by refinancing now into the cost to do the loan. That will give you a break-even period in months. That should give you an idea whether or not it makes sense. For instance, if your prepayment penalty is $1,500, the cost to refinance is $2,000 but your monthly savings by refinancing are $100, then you will break-even on your cost to refinance in approximately 35 months. That's almost 3 years... Will you be in that house for more than 3 years? If so, then it might make sense.\n\nHopefully this helps... Good luck!
608970
I would love to tell you that everything will be alright. But you are in a very tuff situation. It sounds like the pinnacle of either some hard times or poor choices are catching up to you. The first thing is look to a mortgage loan BROKER, not a bank.. A broker is going to work with a greater number of banks and lenders that will be able to offer you a mortgage if there is one available to you. There are loans out there up to 125% of your homes value that can be utilized in a refinance. However loans that high are often offered only to good credit high FICO score borrowers. IF you have not had a lot of lates since the Bankruptcy you might be in luck, however if you have had lates since.. you are really not in a good position to refinance. Antoher option is somehting called a "Short Sale" this is an option that you may know about from all the mailers you are getting from real estate agents and or investors that saw your home listed in forclosure... It is where you find a seller to your home, and the offer is presented to the lender (your real estate agent can do this) and the lender agrees to "forgive" the loan to whatever amount and sell the home for less than you currently owe.\n\nLet me tell you as someone in finance and mortgages this is one of the best options to you. Whatever the situation and however you got there, you want to walk away in the best situation you can. You bought a home once, and can again but don't let it go all the way to forclosure waiting for something magical to happen because it usually does not.. Sel it using a short sale and walk away from it without a forclosure.. It does not sound like you have any equity to lose and if you walk away without a forclosure on your credit and without the debt of mortgage balance on a home you longer own you will be in a better spot.\nOnce that is done you and your husband can focus on getting back on your feet. Best of luck to you!
408639
This depends on a number of factors. First your pre-approval was determined on the state of your credit report at this time. You approval depends on your debt/income ratio and your credit history. It takes into account how many cards you currently have an obligation to repay. Often creditors like to see you having cards and how well you handle them, but too many obligations could scare them off. If you are simple consolidating into one loan, without adding to your overall debt to income ratio, then I see no reason this should harm you. If you are considering taking out more credit, then it would hurt you.\n\nHowever, if you could wait until escrowww closes, I think this would be a safer option. Usually it takes 30 days to close escro on a home purchase. I would get out there and find the house I wanted and close escro, then consolidate cards and other debt into one loan. I think it would also be easier to do so when you have purchased a home. It is always in your best interest credit wise to own rather than rent. When you own you are creating more assets in the form of equity. Lenders like to see your overall financial state and building equity is rather like money in the bank. \n\nI suggest you seek out a financial adviser, pay the fee for a professional opinion and not rely on what is written here.\n\nI wish you all the best life has to offer.
101746
Credit card debt has one of the highest interest rates, and thus should be avoided. Consolidating it into a mortgage means borrowing extra money on your house to pay off the credit card. Since mortgages are generally at a lower interest rate, it sounds like a good idea.\nThe flip side of it is that you are borrowing the money for 30 years, having to pay a higher mortgage bill for all that time, which may mean it costs more in the long run, plus your putting your home up for collateral on money you spent for whatever you bought with your credit card.\nMaybe the better bet is to concentrate on paying off those credit cards ASAP and swearing off borrowing on credit cards. Using credit cards and carrying a balance on them = buying things you don't have the money to pay for. No one should do that for long...\nFor more info on how to live without debt, or the baby steps to getting out of debt see www.daveramsey.com.\nHis book "The Total Money Makeover" is a real plan that works. His radio show can be listened to on the website, check it out...he explains things better than I can and really helped me.\nBest of luck
368217
mattycindc is right on target!  Nice to see someone do the research before answering questions here.\n\nIt is generally recommended that you have 2-3 cards, and use them occasionally to establish a history for payments.\n\nIf you have more then 6, it makes it look like you have far too much available credit, and it will look bad to future lenders.\n\nWhen you close them, you are lowering your debt to credit ratio, which also looks bad.  It makes it look like you have suddenly used up a lot of your available credit.\n\nHere is your game plan.  If you have no plans to get a loan in the near future (6 months), then go ahead and close one or two cards.  It will lower your score for a short time, but your continued use of the other cards will quickly restore it.  Just try to keep 2-3 cards active.\n\nOther than that, you are doing everything right.  Pay on time, and keep your balances low.
462639
The answer to this question depends on a lot of circumstances that are specific to your parents, so no one will be able to give you THE correct answer.\n\nThat being said, there are still things to consider:\n\nSuppose your parents owe $100,000 on their current house and $60,000 in credit card debt. Let's assume that's all of their debt - a total of $160,000. Some of that debt is being repaid at a mortgage rate (what that number is depends on when they took out this mortgage), some of that debt is being repaid at credit card rates (again, these differ depending on the cards). \n\nFor the sake of argument, let's say that the mortgage rate is 6 percent and the credit card rate is 14 percent. Without doing the math (which would require a whole new set of assumptions about the term of repayment, etc.), I think it's easy to understand that repaying a loan at 6 percent is "cheaper" than repaying a loan at 14 percent. (Remember, the "cost" of a loan is really how much interest you'll pay during the repayment period).\n\nNow suppose they take the same $160,000 debt and refinance it, but now, all of the $160,000 is borrowed at 6.5% interest, rather than some at 6 and some at 14. Again, it should be apparent that the "cost" of paying back the $160,000 is "cheaper" at 6.5 percent than it was at 6 and 14.\n\n(Remember, however, that the sale and purchase of homes are associated with significant closing costs. In my area, closing costs average about 3 percent of the value of the transaction for buyers and maybe 1.5 or 2 percent for sellers. Since your parents are both selling and buying, they'll face closing costs on both transactions, and the sum total of these costs will be a significant amount.)\n\nAs for your question about closing credit cards - Credit worthiness (your ability to borrow) is based on your credit history. Banks and other lenders are notoriously reluctant to lend money to people who do not already have credit from other lenders. Part of what goes into their analysis is your ratio between credit available to you, and credit actually being used. \n\nYou might think that lenders would prefer to lend money to people who don't have any other outstanding debts, but in reality, it's the other way around. Having an established credit history, using those cards frequently, carrying a reasonable balance, and scrupulously paying them back on a month-to-month basis are all big plusses when it comes to borrowing. \n\nAnother thing that may surprise you is that lenders are more interested in how you are managing your money right now - and not AS interested in your past payment history. The fact that your parents maintained balances for many years and paid them off is not as powerful a "recommendation" for future credit as the cards and balances that they have at the time they apply for more.\n\nIn other words, it's good advice not to close out all of your credit cards. Pay off balances on cards that have the highest interest rates (they're costing you the most), and keep paying off those lower interest cards on a monthly basis.\n\nRemember - this is just generic advice - your parents may need to retain more liquidity with their money, because of their own unique circumstances (age, health, needs of the children, etc.). Real estate has been a tremendous investment for many years, but it's notoriously non-liquid, meaning it takes a lot of time and a lot of expense to get equity out of a home. Other investments (stocks, bank accounts, etc) may have lesser returns, but provide much faster access to money when an emergency arises.\n\nDefinitely speak to a financial advisor who knows your parents' unique circumstances before committing to any particular plan of action.\n\nBest of luck to you and your parents!
1145391
I totally agree with Renita M's advice.\n\nMy concern is your eagerness to aquire more credit when you are apparently starting to get in trouble with your current debts.  I don't believe balance transfers will help you this way.\n\nMany times I've adviced one person to get a card with a co-signer with good credit.  But that won't help you if you are already in debt.  Having more available credit may hurt your own score.\n\n\nHow much equity do you have built up in your home?  Would a home equity loan help your situation?
152441
NO......I WOULD STRONGLY SUGGEST THAT YOU SELL THE HOUSE..\nBECAUSE THEN YOU ARE GOING TO BE STUCK WITH 2 PAYMENTS... THE ONE FROM WHERE YOU BOUGHT THE HOUSE...AND THE 2ND LOAN YOU TAKE OUT...\n\nWHATS GOING TO HAPPENED WHEN YOUR MONEY RUNS OUT...FOR PAYING THE HOME YOU PURCHASED....??\n\nYOU WILL BE STUCK WITH 2 PAYMENTS.
1035617
Be up front and let them know that you have outstanding debt and how you're taking care of it.  Honesty, surprisingly, blows them away.  \n\nOffer to pay a larger deposit, right off the bat.  State you understand you do not have great credit and that you're taking steps to rectify that, but that you're willing to pay a higher deposit to make them more comfortable.\n\nTake a look at your credit report too, there are lots of free programs.  Make sure all of it is truly yours and that there are no duplicates.  Have answers ready so when a potential landlord pulls your credit, you can explain the mistakes and inconsistencies and show them you're pro-active at the same time!  Good luck!!
799247
Nobody knows what the rates will be like in six months. that's the risk.\nDepending on how bad the credit is, Rates look very good now. Can you afford the payment comfortably, now? If so I'd do it. \n\nIf you do, though, make sure you have a prepayment penalty that fits within your time-frame for rebuilding your credit. Also, there is something called seasoning that you must have before you refi. it varies between companies, but you usually have to make consistent payments for a year or six months.\n\nIf you're planning to buy then refi into a better loan, be aware of closing costs. Anytime you have a short term loan you want it to cost as little as possible, even if the rate is higher.\n\nFeel free to write me with any questions.