Those 125% mortgages...

[Sansa]

Are there still places out there that will let you re-fi into one of those 125% of your home's value mortgages? Or are those long gone now?

I have about $20,000 in credit card debt. Our house is valued at about $127K (we "paid" $121,500 for it almost two years ago) We have very little equity in the house itself, because we had to get one of those 80/20 loans in order to get the house. We intend to re-fi at some point to consolidate the two loans, so a re-fi is inevitable but we still have about 13 years before we "have" to do that due to the structure of the 20% loan.

If we could take out a $150K mortgage, I could pay off the CC debt and then we just work on the house payment. Right now, we pay about $1100 on the house (inc. escerow payment) a month and I pay about $425 in CC minimums. So if overall our monthly payments could go down, have NO MORE UNSECURED DEBT, and a little cash out besides (which we probably would need for an unrelated legal issue (child custody lawyer - long story that I'm not getting into here)) wouldn't that be a... better thing? Not a good thing, surely, but a better thing?

Neither me or my husband has that much space before we max out everything, so it's mostly the lawyer that we need to work out. Our families can help some, but not much.

Right now our 80-loan has a FIXED rate of 6.25%, and the 20-loan a disgusting 10.25% Most of the money we pay on that goes to interest, only about $12 a month (out of a $225 payment) goes to the principle! I'd love to get rid of that, I just don't know if it's really feasible

We plan on staying in our house for the next 10+ years and we're working on finishing the basement, which will up the value of the house. Over time we'll do more yard work as well I'm sure (it was brand new when we bought it, so no landscaping to speak of, which we've improved on a little since)

What would you do? We have very little money at the end of the month in order to do the snowball thing, we're just barely keeping afloat as it is. And the thought of adding more CC debt somehow to pay for a lawyer could easily push us over the edge.

 

[fkj2]

I don't think (but you'd have to check with your banker for sure) a house can be financed if the current appraised value is less than you already owe on the house. That's why so many people can't refinance: In this market, their homes are worth less than what they paid for them, so they're "locked into" their mortgage.

And it can cost thousands to refinance.

 

[Sansa]

According to our property tax bill, our home is worth $127K. Or is that not accurate? We paid $121,500 for it.

 

[becca011906]

tax bill probably not accurate compaired to when you bring in an person to do the aprasiel on the house... then the apriasiel is compaired to other homes in the area that have sold in the past year and they come to what your house is actully 'worth' ... what the bank wants to know is in your area what can they actully sell your house for it you lose the house and they turn around to sell it...

 

[Lisa_M]

What happens if your house value drops? Also, you will owe thousands more on that unsecured debt of 20k over 30 years, instead of working hard to get it paid off ASAP. Also, you've just put your house on the line for that debt. Are you comfortable with that? I've always read, it's not wise to pay off credit cards with a refinance. My parents did that a couple of times and they are still in significant credit card debt along with a house that isn't paid off and should be. How are you going to ensure you don't get into that credit card debt again.

I don't own a house, so I probably know nothing...

 

[TangaroaTiki]

I didn't know that banks were ever handing out more than the value of your house!

 

[disneymom3]

I am not a financial expert by any stretch of the imagination but I would really be hesitant to do this. IF you were to get into trouble down the road--job loss, illness etc--and you needed to sell your house, you would be in worse trouble by owing more on your house than it is worth. Especially with the state of the economy as it is. Conversely, if you have that same trouble but can at least sell your home to pay off your mortgage, you are a bit safer.

What I would do personally is to cut every nonessential you can think of and start throwing it at the credit card bills. I know it's hard to be paying that high of interest on your 2nd, but at least that should be tax deductible. The credit card debt is just a straight drain. If you are getting a tax return, you could hopefully use that for the lawyer you need. If not, maybe other people on here would have some suggestions.

Do you have any savings that you could put toward debt while still having a little bit of a cushion?

Many people on this board have had a lot of success following Dave Ramsey's plan. Look him up on the internet or go to the library to find more of his stuff.

Good luck!

 

[dvcgirl]

I would say that the 125% of home value loans are gone, and for a reasonably long time.

In fact, right now, banks are only refinancing loans in certain areas of the country where folks have 30% equity. My county (Monmouth NJ) is one of them and while home values here went way up during the boom, we're certainly not Miami or Orange county CA

 

[Sansa]

By not using the cards... I rarely use them anymore.

And when you have no extra money coming in every month, how do you pay off anything, let alone get ahead? You're supposed to save up $1000 in savings to do the snowball program, I can't even keep the $50 I have auto-deposited in savings in there every two weeks... and even if I could it'd be almost a year before we could start snowballing anything.

 

[Sansa]

I am not a financial expert by any stretch of the imagination but I would really be hesitant to do this. IF you were to get into trouble down the road--job loss, illness etc--and you needed to sell your house, you would be in worse trouble by owing more on your house than it is worth. Especially with the state of the economy as it is. Conversely, if you have that same trouble but can at least sell your home to pay off your mortgage, you are a bit safer.

What I would do personally is to cut every nonessential you can think of and start throwing it at the credit card bills. I know it's hard to be paying that high of interest on your 2nd, but at least that should be tax deductible. The credit card debt is just a straight drain. If you are getting a tax return, you could hopefully use that for the lawyer you need. If not, maybe other people on here would have some suggestions.

Do you have any savings that you could put toward debt while still having a little bit of a cushion?

Many people on this board have had a lot of success following Dave Ramsey's plan. Look him up on the internet or go to the library to find more of his stuff.

Good luck!

We don't spend a lot on non-essensials. About the only thing we could cut would be cable TV, but when I've tried that in the past then to have just internet is just as much No landline, so DSL isn't an option, and neither is not having home internet access. We get pizza maybe once or twice a month, usually that $5 hot-n-ready Little Caeser's thing, and if I go out to lunch at work it's cheap (dollar menu at McD's cheap). I usually bring leftovers from last night's dinner to work for lunch.

No savings. My husband STILL didn't fix his tax withholdings from when his ex left him (because he needed the money coming in) so even with all the interest, his daughter, and everything else we can claim we're still only looking at a $600 refund, based off the numbers I put in a calculator on H&R Block's website. I may get a small bonus from work. But ANY extra money we get won't go into savings, it will probably have to go to the lawyer.

If one of those mortgages are no longer possible, so be it. I'll just have to take on more CC debt load *sigh* But I only have a few thousand left on that, and I really have no idea how expensive this'll get by the end.

I've read a lot about what Dave Ramsey has to say from this board... and like I said, it says you need $1000 in savings before working to pay down debt. Where is that going to come from?

 

[EthansMom]

By not using the cards... I rarely use them anymore.

And when you have no extra money coming in every month, how do you pay off anything, let alone get ahead? You're supposed to save up $1000 in savings to do the snowball program, I can't even keep the $50 I have auto-deposited in savings in there every two weeks... and even if I could it'd be almost a year before we could start snowballing anything.

You need to take a long hard look at your spending and "find" the money or take on extra work to make more money. That's what many of us here have done. Also, STOP using the credit cards. Unless it's an absolute emergency, if you can't afford something, you don't buy it.

Good Luck!

 

[kfeuer]

I agree with what everyone else has been saying--you've got to find another way to get that credit card debt paid down.

It sounds like you desperately need to bring in some more money to get out of this mess. Is that a possibility (second jobs)? Are there any expenses you can cut? If you feel comfortable posting your monthly budget, perhaps we can give you some more suggestions.

 

[Lisa_M]

We don't spend a lot on non-essensials. About the only thing we could cut would be cable TV, but when I've tried that in the past then to have just internet is just as much No landline, so DSL isn't an option, and neither is not having home internet access. We get pizza maybe once or twice a month, usually that $5 hot-n-ready Little Caeser's thing, and if I go out to lunch at work it's cheap (dollar menu at McD's cheap). I usually bring leftovers from last night's dinner to work for lunch.

No savings. My husband STILL didn't fix his tax withholdings from when his ex left him (because he needed the money coming in) so even with all the interest, his daughter, and everything else we can claim we're still only looking at a $600 refund, based off the numbers I put in a calculator on H&R Block's website. I may get a small bonus from work. But ANY extra money we get won't go into savings, it will probably have to go to the lawyer.

If one of those mortgages are no longer possible, so be it. I'll just have to take on more CC debt load *sigh* But I only have a few thousand left on that, and I really have no idea how expensive this'll get by the end.

I've read a lot about what Dave Ramsey has to say from this board... and like I said, it says you need $1000 in savings before working to pay down debt. Where is that going to come from?

With the DSL thing, Verizon offers DSL without a landline phone in our area. You may want to see if it's available in your area. You have to ask for it. They didn't advertise it when we got it. It costs us $36/month with taxes on a 1 year contract.

Also, cable companies offer networks and a few other stations only for about $15-20/month. These are unadvertised as well. I know that Comcast offers it because it is what we previously had and are going back to.

As far as getting more money goes, do you have some things you could sell on craigslist or ebay? Are you or DH able to work overtime or get a part-time job? Maybe even look for a new job at a higher wage.

As far as a lawyer goes, can you find one that is willing to work on a sliding scale or accept a payment plan? Maybe find out if there are any lawyers who do pro bono work. Some cities have agencies with free legal advice and representation.

I really feel for you. We are strapped for cash and it's rough. Good luck to you!

 

[Darcy03231]

By not using the cards... I rarely use them anymore.

And when you have no extra money coming in every month, how do you pay off anything, let alone get ahead? You're supposed to save up $1000 in savings to do the snowball program, I can't even keep the $50 I have auto-deposited in savings in there every two weeks... and even if I could it'd be almost a year before we could start snowballing anything.

Do you have cable tv? - if so, cancel it or cut it down to the most basic plan they have.

Do you have both a cell phone and a land line? - if so, cancel one.

Don't eat out.

Don't buy anything that isn't absolutely necessary. Personally, I stay out of the stores as much as I can which limits the impusle buying. I also make a list and stick to it. If its not on the list I don't buy it.

Try cutting your grocery bill by making big meals that can be used for two (or three) nights dinners. Bring a lunch to work.

I borrow books and movies from our local library (free). They also have movies on both Saturdays and Sundays in their theater which are free.

Check out your local paper for free things to do. In the nice weather my kids love to pack a picnic and go to the local sky diving school and watch the parachuters jump.

These are just some of the things we've done to cut costs in our household.

 

[seashoreCM]

I would cut the cable TV.

Any relatives you could "refi" with at a lower interest rate and you would pay them back as if they were a bank?

Maybe, heaven forbid, you should get rid of the lawyer. For the child custody issue maybe you will have to be your own lawyer (the technical term is "go pro se") and have a fool for a client.

There is no point in refi-ing your home except to get a lower interest rate. Given the closing costs for refi-ing, even accomplishing that would be difficult.

Disney hints: http://members.aol.com/ajaynejr/disney.htm

Heads up for those eavesdropping! Do not refi to something with a prepayment penalty. Many folks got into the subprime mortgage loan mess because they were in a situation similar to yours except they had to come up with cash.

 

[Sansa]

With the DSL thing, Verizon offers DSL without a landline phone in our area. You may want to see if it's available in your area. You have to ask for it. They didn't advertise it when we got it. It costs us $36/month with taxes on a 1 year contract.

Also, cable companies offer networks and a few other stations only for about $15-20/month. These are unadvertised as well. I know that Comcast offers it because it is what we previously had and are going back to.

As far as getting more money goes, do you have some things you could sell on craigslist or ebay? Are you or DH able to work overtime or get a part-time job? Maybe even look for a new job at a higher wage.

As far as a lawyer goes, can you find one that is willing to work on a sliding scale or accept a payment plan? Maybe find out if there are any lawyers who do pro bono work. Some cities have agencies with free legal advice and representation.

I really feel for you. We are strapped for cash and it's rough. Good luck to you!

I want to start up an etsy store (can't post links yet, but it's etsy.com)... I've made hand-painted heraldic-type banners in the past (think renn faire, SCA, etc) and made a little money off them, but where to find the money for materials? I have some paints and things, but I can't just drop $50-$100 on fabric and other things that I'd need. I've gone back and forth about a second job, but I just don't know how fesiable it is. We both have long commutes, the girls need someone home every other week by six to get them from the daycare (and sometimes the other week too, don't get me started on that one). Plus, driving into town for a $8 an hour job on the weekend just seems stupid. Would you drive 50 miles round trip for a few hours working retail, and screw up all of your time off to boot? I'm just not sure (and why I've considered the etsy store, but obviously that's not as sure of a thing as employment would be). I already work about 5 hrs OT every week, and my husband's job schedules him for 37.5 hours so any "overtime" he has will still be straight time.

Here's what we spend in a month. Utilities are averaged.

House payment (both) - $1100
Electric bill - $100
Gas - $70 (now, more like $10 in the summer)
Chase Card - $175
Disney Chase Card - $75
Discover Card - $95
AMEX - $75
Water/Sewer/Trash Bill - $90
Car Insurance - $85 for two vehicles
Cable and Internet - $65 (which will go up in July when that deal runs out)
Student Loans - $80
Cell Phone - $80 (these are our home lines - no landline as I said - seems to be an extra expsense)
Daycare - $300 a month, $450 when we have to pay three times. This will double in the summer if we can't find alternate arrangements, and possibly sooner since it seems like The Mother of the Year won't have a job after she moves, and seems to think she won't have to pay child support, which may not be enforcible anyway since she'll be living in another country* If/when she moves, we've talked about changing our schedules so I can take the girls to school and my husband can pick them up, which we're not even sure his job will let him do... but that doesn't change the summer any.
Groceries - $250
Gas - $300 (as I said, long commutes - my car is about 25mpg and the van is about 23)

My husband also has a CC with a $1000 balance on it, which he pays so I don't know the minimum. He doesn't have to pay child support (thankfully) because the custody agreement is 50/50.

Don't know if that helps anyone any, but that's pretty much what we need to cover in a month.

*I don't think you can find a pro-bono lawyer who's knowledgable in international child custody... :/

 

[Sansa]

Getting rid of the lawyer is not really a feasible option... domestic child custody is hard enough to deal with, let alone international. My husband's girls' mother is moving to Europe. She claims she'll be living with her boyfriend and his parents, since he lives with them. She won't have a job right away outside of a home business that the parents aparantly run. Honeslty I dont' believe any of it, I believe she's moving over on a marriage visa... but there I go elaborating.

Basically, she's never provided the girls a stable sitiation. Her second ex-husband left her after she cheated on him with this guy in Europe, and now she wants to abandon her girls and move over there to be with him. She's only been divorced from my husband for just under three years, and she's already been divorced again and has lived in several homes. Her reasons for moving are poor at best, and she won't be able to provide for the girls let alone have a good place for them to stay over the summer. Plus the older girl most likely has aspergers syndrome (still working with the doctors on that one) so her going over there every summer probably isn't in her best interest. That's why we need the lawyer, so that the visitation can occur over here, not over there. Whether or not we win that battle, we can hopefully reduce the time they'll be away from home. It's not about her, she's welcome to come see them at any time. It's about keeping them SAFE. But again, that's a whole 'nother issue that I'll probably be flamed for

 

[delmar411]

so what do you bring in each month? That would help in figuring what's left over or not leftover.

 

[delmar411]

House payment (both) - $1100
Electric bill - $100
Gas - $70 (now, more like $10 in the summer)
Chase Card - $175
Disney Chase Card - $75
Discover Card - $95
AMEX - $75
Water/Sewer/Trash Bill - $90
Car Insurance - $85 for two vehicles
Cable and Internet - $65 (which will go up in July when that deal runs out)~~LUXURY
Student Loans - $80~ ask for a hardship deferral
Cell Phone - $80 (these are our home lines - no landline as I said - seems to be an extra expsense)one word TRACFONE
Daycare - $300 a month, $450 when we have to pay three times. This will double in the summer Hire a HS senior to watch them all summer, offering them $1k for the summer, might find someone interested in majoring in child development.
Groceries - $250
Gas - $300 (as I said, long commutes - my car is about 25mpg and the van is about 23)

That's right off the top of my head and honestly you don't even have half of your real life expenses listed here. I don't have to know you to know you are missing:
oil changes
clothes
gifts
household expenses
repairs ~ car or house
medical bills ~ co-pay , RX, etc
tax bills ~ for car

 

[Sansa]

Clothes? The girls clothes come from Goodwill or reletives. We buy clothes for ourselves when things get holes in them or its absolutely necessary. Things like gloves and boots and hats and new shoes for the girls come first and there's little left for us.

Gifts? Oil changes? Those are squeezed in whenever possible. The only way we afforded Christmas this year was because we both got an extra paycheck in November, and I still couldn't by gifts for my family (meaning mom, dad, siblings)

We bring in about $3400 a month between the two of us.

I've thought about the student loans, with the hardship thing... but don't you need to prove more than just "I was an idiot and spent too much"?

I forgot about medicine... my husband probably has about $50 a month in co-pays for his medication. I don't get my asthma meds because I don't need them as much as he needs what he's on.

Tax bills on cars? What do you mean by that? Our property taxes are worked into our monthly house payment.

I've considered the HS kid angle for summer care... espically if Mommy Dearest is gone by then.

Not having internet at home is not an option. Sorry. Cable we could live without, but not internet.