Financial Advice - Ditech.com - HELP

[billwendy]

Hi everyone,

I know all of you are very money conscious and have good advice, so I thought I'd ask here....

We just inherited my grandmothers house, so no longer have a house payment. The thing is is we would like to do some remodeling as the kitchen is especially old and kinda yucky as are the bathrooms. I have no credit cards (DH has a tiny one for emergencies) and no bad marks on my credit - we do have a car payment which has never been late. At DITECH we can get a $40,000 line of credit to do these remodeling things as well as pay off our car. The interest rate is 9% I think - and its a 15 year "loan".....what do you all think of this - I really have no idea at all wether to take it or not.....I just get scared when talking money!!!!

Thoughts - advice???

Thanks, so much, Wendy

 

[LizinSTL]

Hi everyone,

I know all of you are very money conscious and have good advice, so I thought I'd ask here....

We just inherited my grandmothers house, so no longer have a house payment. The thing is is we would like to do some remodeling as the kitchen is especially old and kinda yucky as are the bathrooms. I have no credit cards (DH has a tiny one for emergencies) and no bad marks on my credit - we do have a car payment which has never been late. At DITECH we can get a $40,000 line of credit to do these remodeling things as well as pay off our car. The interest rate is 9% I think - and its a 15 year "loan".....what do you all think of this - I really have no idea at all wether to take it or not.....I just get scared when talking money!!!!

Thoughts - advice???

Thanks, so much, Wendy

The only advice I have is to see if there is an prepayment penalty. Di-tech is owned by GMAC and I've heard this is fairly common on their LOC. If you have no mortgage at all, you could do a traditional mortgage for a portion of the equity for a lower interest rate, could you not? Take the max you'd need to do your improvements, bank it as you go through your improvements and pay it back as soon as you can.

 

[ceecee]

I would check on a home equity line of credit, 9% seems awfully high.

 

[shelly3girls]

It is hard to say without knowing your credit score but 9% is very high. A HELOC should run you around prime. This would be a floating rate but I know that we have the option converting our HELOC into a fixed rate loan for a very reasonable rate. I would definitely shop around. We found the best rate directly through our bank.

 

[mizliz]

shop around for rates, and don't forget to ask at your local Credit Union!

 

[sanibelover]

DO NOT use DiTech! As a Realtor, I see a lot of different leding scenarios, and I can tell you that DiTech and many of the "online' or on television deals really look like scams. (Especially when we get to the closing table and see the fees that they charge....) Go to your local banks, credit unions or local mortgage broker. There are literally thousands of programs that they have access to and they will be able to find a loan that is right for you. 9%????? The rates are in the 6's right now - do your homework. We have a very reputable bank in our area offering 5.875% for $50,000. Get some recommendations from friends in your area. Getting a mortgage (or home equity loan) can be a nightmare without a little guidance from someone who knows what they are doing, but with a lender who is on top of things, you will not have to get involved much at all. They will take care of most everything for you. Good luck!

 

[Darcy03231]

Definitely check with your local bank or credit union. I was just in the bank yesterday and ours was offering prime plus 0% for the life of the loan.

 

[Bren's Mom]

I agree that 9% seems very high, although without knowing your credit scores it's hard to say whether that's really out of line. First thing I'd do is ask run your 3 credit scores at myfico.com...for both of you. With a discount code the total for the 6 scores will be less than $100. Then you'll know what you're dealing with. Creditboards.com, in their mortgage forum, will be able to tell you pretty accurately with your scores what you should expect in terms of interest rate and other variables for a home equity loan or line of credit. Oh, and one other thing...if you're going to use $40k in one lump for one big reno and that's it then you'll be fine with either a HEL or HELOC. However, if there is more work that will need to be done, or the potential for big repairs that you might not have the cash for I'd go for a HELOC (home equity line of credit) instead of the loan, and look for a larger amount then you think you'll need. They all work a little different but basically the HELOC is like a credit card; you have x amount of available credit to use when you need and you only make payments on the amount that you've taken out. That will give you a cushion if you feel you need it. Often, though, HELOCs have variable rates rather than fixed so be sure you have all the info.

I definitely encourage you to check out your local credit unions. Even if you're not members, find one that allow residents of your area to join and then open a small account. We have found our CU to consistently have the best overall rates/low fees.

Good luck!

 

[RitaE]

that is a very high rate and you do not want to refinance your car out over 15 years. ( I bolded that because it is important)

Why not pay the amount of what would be a mortgage payment into a savings account every month, and pay cash for the remodeling as you save enough money for each project.

At least the bathroom stuff, that would probably work. Kitchens are trickier but still - you could replace one appliance at a time, then do the cabinets and counters etc...

 

[CarolA]

that is a very high rate and you do not want to refinance your car out over 15 years. ( I bolded that because it is important)

I agree you aren't "paying off your car" you are extending the financing on the car....

 

[billwendy]

Thanks so much for all your advice Disney friends- keep it coming!!

 

[TammyAlphabet]

Why not take the cash you would have been paying on the house payment and save up for the renovations? This would keep you from having to pay interest over 15 years which can really add up. Just a thought.

 

[momof1princess]

i can't in good conscience see a thread about someone considering a loan through DiTech and not say something....these people scammed my mother, plain and simple. they told her she could get a certain rate, her payment would be a certain amount, but neither was true-her payment is almost $200.00 higher than they said it would be and she's stuck with it now because she's disabled and can't get another loan. the house payment takes most of her disability check and we, her immediate family, get to pay her other bills. PLEASE, PLEASE shop around!

 

[billwendy]

Ugh - your poor mom - that is HORRIBLE!!! Its so hard to know who is scammin these days!! I think we are going to shop around - check our local bank and CU - has anyone ever done lending tree? We'd like to get the renovations done, as we are considering adoption and that requires a home visit - you know, i'd just love it to look nice and new....

 

[momof1princess]

yes, i know it's humiliating for her to have to take money from her daughter, mom & sister, but we're trying to keep her from losing her home, which is really the only asset she has. congrats on the adoption! i think shopping around locally for a loan is a great idea-we got an awesome deal 3-4 years ago from a local mortgage broker and chase owns our loan now. they're terrific to deal with! best of luck!

 

[lauradenise4779]

We did this not long ago. We are members of a credit union, and we were able to get a super great rate. I think credit unions tend to have lower rates than traditional banks.
Whatever you decide, just be sure that you will be able to pay back the full amount, you know..interest, fees, prepayment penalties, etc. I know that sounds silly, and I'm not trying to say you wouldn't already know that (duh!) but I have friends who took loans not even thinking about when & how much they would eventually have to pay back.
Good luck with whatever you choose!

 

[blackforest]

We are in the same type of situation. DH's father recently passed away and we "inherited" the family farm. To divy up the remainder of the estate to the other siblings, we are doing a HELOC to settle the debt. We are using our local bank and they are quoting us Prime - 1%. We have checked several other lending institutions and they can't even come close!

 

[lovesmurfs]

Agree with doing what you can to pay cash and flow it, versus debt.

However, if you need to make the changes before having the cash, I agree with a PP -- rather than a LOC, I'd think a 15 year conventional mortgage, just for the amount you need for the renovations, would give you a much better interest rate, and lock it in for the life of the loan. You could then concentrate on paying it off as quickly as possible.

 

[Mickey's Neighbor]

Most Ditech Equity Lines of credit (as far as I know) have a variable rate which is somewhere between 5 and 6% right now. They are usually 30 year loans that for the first 15 years you can pay as little as 1% of the balance of the loan. After those 15 years they MUST be paid in full within the remaining 15 years.

 

[disneymarie]

Go with a local large sturdy bank or credit union.
Our home equity was bought out by Litton Loan and it was a nightmare, They never owned our loan. Never sent a goodbye letter from old lender or hello from old lender. It was near payoff date. Auto deducted.

One day I had a sheriff on our door step looking for a home half a block away. Our name! The rual address was wrong and instead of paying a final payment they did a hide and seek. did not own the loan and we almost lost our home. I finally had to get an attorney to make the accept the final payment and NO penelties. They almost took our home and we never would have known it!
There is a class action suit against them....We actually had a no sell clause in our loan....didn't seem to matter.
At least it is over with but lots of crooked companies out there.
Now I am scared as our home mortgage it a Fannie Mae....
Di