We have an 80/20 mortgage. We moved in 3 months ago and it is tough for first time home buyers. Any chance of taking out a home equity line? The condo appraised for more than it is worth.
2007-05-29 07:58:08 · 8 answers · asked by elinq 2 in Business & Finance ➔ Personal Finance
Sorry, the condo is worth more than we paid.
2007-05-29 08:06:42 · update #1
You said you did an 80/20 that means even if it appraised for more 3 months ago you are at 100%. You don't have an equity.
To work on your debt I suggest you read the Total Money Make over by Dave Ramsey. He lays out the easy steps to get out debt, yest it is some times hard to give things up and do a budget but it is easier than having financial stress.
Go to his website, he is probably having a sale right now on his books because it is graduation season.
Update- since you added that the condo is worth more than what you paid- a home equity line of credit still isn't a good choice. In 3 months you most likely still don't have enough equity to consolidate all your debt. Plus you have fees when you do a loan like this. I suggest you get on the Ramsey plan and get the other debt paid off as fast as possible so then you don't have to worry about the debt.
2007-05-29 08:05:30 · answer #1 · answered by mldjay 5 · 1⤊ 0⤋
To help out a bit while you check things out, I would recommend you do some debt stacking. Make list of all paymets that are loans, include your mortgages both first and second. List them in order of highest interest first all the way to the lowest. Next to this place the names of the companies you pay each. Next, list the minimum payment they accept. And finally, place how much you actually pay.
From the second on to the bottom, make minimum payments. For the first, take all the extra for the others and add that to the first one. After that is paid, roll that entire amount down to the next one. Keep doing this until everything is paid off. Once paid off, split that in two. Put one part into a ROTH IRA and the other use to make an extra principal payment on the second mortgage.
Do you know if the second is an interest only? I ask this because my wife got into her condo with an 80/20. When we refinanced, I found that the second was an interest only. That was why we got screwed when we refinanced the first time. Now we are in a 30 year fixed, bi-weekly loan. It will be paid off, if we do not put anything more into a principal payment, in 21 years.
2007-05-29 09:35:36 · answer #2 · answered by Mark S 6 · 0⤊ 0⤋
No offenense to you, but I feel the ridiculous pressure in my chosen profession to have to basically clean up other people's mess. From your question it appears that you were not completely informed with the process of your mortgage. As someone mentioned earlier, you were already at 100% equity. You have to pay down some of that equity to consider yourself in a comfortable enough position to refinance the second mortgage, from which you will attempt to utilize that built up equity, to pay off some of your debts. Remember, you are placing all those monthly payments in the new second mortgage payment, so don't be surprised if the new payment on your second mortgage is a little high. Don't panic, do what you can to keep paying the mortgage on time. If you can't pay anything else, at least pay the mortgage on time. Talk to each of your debtors and see if they will lower interest rates, or settle for a payment plan, if they are collection accounts.
2007-05-29 09:01:20 · answer #3 · answered by jedibratt 2 · 0⤊ 0⤋
Basically you already have a second mortgage (home equity line, loan, and second mortgage are all the same things). If your home is worth more than what you paid, you should be able to get an appraisal and get your current second mortgage amount refinanced and increased. I work in the mortgage business and depending on who did your loan you may want to see if there is any pre-payment penalty for refinancing within six months (there are some loan programs where this is the case)
2007-05-29 08:26:22 · answer #4 · answered by Trickle 1 · 0⤊ 0⤋
You have no equity in the house (the other 80%). You have to cut expenses to the bone the first year. You can also change your withholding on your W-4 so you can get more in your paycheck each month. You can do this because you will be deducting home interest and property taxes on your 1040 next year.
2007-05-29 16:39:56 · answer #5 · answered by Steve R 6 · 0⤊ 0⤋
Is your income strong? Get the equity loan. most lenders want you to have lived in the prop for at least 6months before going into the equity. Good luck! Beware Of banks with the initals WFB!
2007-05-29 08:08:10 · answer #6 · answered by luna 5 · 0⤊ 1⤋
You answered your question with your final sentence. You are already 'upside down' on this financial deal. Good luck finding someone who will take even a higher risk on your being 'upside down" (where you already owe more than the market value of the property)
2007-05-29 08:03:31 · answer #7 · answered by acermill 7 · 1⤊ 0⤋
It should be possible, but they might limit it to 10% or so. You can get some info at www.bestmortgageanswers.info about this.
Since the value is more than you paid, they shouldn't be too hard on you.
2007-05-30 07:49:47 · answer #8 · answered by insureman613 3 · 0⤊ 0⤋