Second Mortgage Shop

I have a solid job ($150k+ annually), good home equity ($200k+), but a lot of debt and falling credit scores. If I could consolidate $50k in debt with a reasonable loan I should be good. Any ideas?

Debt consolidation loans are not free. You will end up owing more money that you do now. Here is a plan to help you get out of debt. If you work the plan, the plan will work for you.

1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an “emergency fund” category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don’t even have to worry about it. You must cut your spending and live on less than you make.

2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.

3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:

To start :
Debt #1 (highest interest): minimum payment+ extra payment
Debt #2 (middle interest): minimum payment
Debt #3(lowest interest): minimum payment

Debt #1: paid off
Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment
Debt #3: minimum payment

Debt #1: paid off
Debt #2: paid off
Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.

That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.

4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.

5a. When you have your emergency fund in place, add a category for “fun” to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.

5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money. Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.

5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.

A home equity loan uses the equity in your home as collateral while a line of credit can be simply a promise to pay without collateral.

Hello, I've recently made a home purchase and will be closing on my new home in about three weeks. Since my credit score wasn't high enough to qualify me for a conventional loan, but income was, the builder's finance company was able to approve me for an FHA loan since it was also my first home purchase. My question is I'd like to put a pool in, I live in Arizona and it's a necessity in this state and was wondering if there are any stipulations as far as the amount of time I have to pay on the loan before I can pull a 2nd mortgage on it or refinance it to get some of the equity and put the pool in and make a few upgrades to the home?

I'm pretty sure there is no prepay on FHA loans. You can refi as soon as you want, you're going to need equity obviously and it doesn't look like you have any seasoning, that might be a problem. You're best bet is to find a broker and have him/her shop it around for you.

I'm selling a rental house and will hold a $26,000 private second mortgage for the buyers. Will the government tax me on this as money I received at the closing? Even though it is just paper? Or will I pay captial gains on any amount above my basis only when I get the payments from the purchaser? Basically, does taking paper look the same to the IRS as getting paid in cash?

When I did this, my accountant counted full amount as though it was a capital gain right then. In the future years, I paid taxes on the interest I received.

Don't forget, what you're taxed on is the difference between what you paid for the property and what you sold it for. Legally, the total selling price includes the 2nd mtge amount, so I can't imagine they'd do it any other way.

I answered the question but i'm not sure if my answer is fully correct or if i need more information

Here is the question:

You read in the newspaper the following two pieces of information: First, mortgage rates rise from 6% to 8% and second, the expected rate of increase in housing prices rises from 4% to 8%. Do you think this news can affect people's decisions on buying houses? How and why?

Answer:

Im thinking that this news will negatively effect people to buy houses becuse houses will be more expensive and the cost of maintaining the house will also require more funds. However, I don't really know if it can positively effect people as well because since housing prices go up, there is a greater rate of return on the house (i'm not sure if I got this right).

Can you tell me if I said something that was off or I can add something to my argument. Thanks xD

If this news gives real interest rates then in short-run people will buy less houses (if they don't expect interest rates to rise further). But it's consequence of fall in supply (houses will be sold for higher prices) on demand-supply graph and fall in demand (higher housing costs).

In case if news gives you nominal rates then conclusion may depend on people nominal income expectations or inflation rate.

we have 3 credit cards with 15K debt and paying average 15% APR …and we think we should try for debt consolidation personal loan which doesn't require any collateral or home equity…so based on experience can you please suggest which bank we should contact for such loan?

you can contact Citifinancial, ge money,hdfc,icici…all these do debt consolidation..your probs will be solved,, but be choosy in your interest rates, coz they will be diff for diff banks…

I recently refinanced with another company and the original company charged me a $500 fee. It is clearly stated that they can in my contract, but I still question the legality of that.

You need to look at the paperwork that you signed, if indeed as you have stated there is an early closure fee, then there will be one for sure. Banks have a way of wording fees to get around any state laws that may exist. However, with most mortgage transactions, there will be some sort of fees associated with the closing of accounts.

I will be filing for Chapter 7 very soon but have a question for the group on a particular instance.

I plan on keeping my house but behind in my mortgage. Thankfully I have a family member that will help me out financially to get caught up until I get back on my unemployed feet.

My mortgage is an 80/20 loan with 2 different lenders -

Loan 1 is $133,000, loan 2 is$17,500. I am 6 months behind on both mortgage payments.

I called Loan 1 and got the reafirmation amount (they have been threatening foreclosure). When I called Loan 2 they told me that the debt has been "written off and reported on my credit rating" (big whoop, my credit is already shot and dead for now). The rep told me I could make payments to get it caught up but she really wasnt your "typical" a-hole collector. I reviewed my my original closing docs and both loans were secured.

The BIG question… if Loan #2 has written off the debt and I file CH7, will the debt be discharged??? Any help is appreciated.

Sadly, no, it's not going to be discharged.

Just before Hurricane Katrina, new laws went into place that restricted what could and could not be discharged as part of a bankruptcy. One reason the Katrina victims are still financially dead is that they can't discharge loans on houses that were washed away in the storm.

I bought a house about 6 months ago, is it possible to get a second mortgage or do I have to have a certain amount of equity first?

You need a certain amount of equity, if you know there is no equity in the place don't bother trying to get a 2nd.

1st loan - 6.875 30 yr fixed with 10 yr interest only option / 2nd loan 9.875 25 yr fixed with 10 year interest only option. If I want to pay more than the interest only, should I just follow the regular amortization schedule, or pay interest only on lower rate and max out payment on high rate loan? I know for credit card focus on high rate, but over 30 years does it make a difference, especially if I am going to refi the loan eventually to get rid of the second??

First general strategy is to pay off all other interest bearing debts, like credit cards or auto loans, that are not tax deductable. (More specific figures can be shared if you need to know specifics to your case)

Then, when all the debt that you have is your two mortgages, pay off the higher rate first.

But consider this, if you are in a 25% tax bracket, you are essentially paying 9.875*.75=7.4% after the potential tax deduction. You could be easily investing that extra money into your 401K and be getting more than 7.4….so depending on your tax bracket, you should do neither and just save your money.

Feel free to email me for more specific advice to your situation.