Over the past years and due to certain circumstances, we have a lot of credit card debt - approx. 50,000.  I have never looked into a second mortage but in researching debt reduction I have seen it as an option.  Should we get a second mortgage to pay off these debts?  What type of interest can I expect on a 2nd mortgage with average but not great credit.  I am drowning here and and clueless as to what to do - I am beginning to read Dave Ramsey's book as well as Scott Bilkers in hopes of finding answers.  Thanks!
204366
Absolutely not! Don't do it. Your big problem isn't financial, it's behavioral. Most of the answers you've gotten are from financial types that have logics about least amount of interest, etc, but they're missing the issue that refinancing won't fix your habits, and you'll probably fall under the false perception that your cards are now free for more charging once their balances are transfered. \nBeen there, done that, so believe me, it will happen.\n\nFinish reading Ramsey, he's your answer.\n\nOnce of the respondants did suggest the debt snowball which is one step on the right track. \n\nWe're doing them now and they're working for us. So far we've paid $11,000+ in debt over the last 5 months, and put aside an emergency fund (and we're far from making big bucks)\n\nHere are the steps:\nPre-steps\n-get current on your debts - at least be paying minimums up to current month\n-cut up all your credit cards (yes, all of them.)\n-sit down with your family and explain that you don't want to live like this any more and that you want a better future for them. You guys are sinking and it will take a family effort to surface and eventually swim out of this mess. Once you've got their buy-in ...\n-stop paying extra on any of debts, including extra mortgage payments (we were doing this one) \n-do a simple budget to spend less and save more - we found we were spending Hundreds a month on going out to eat and see movies. Stop all that. Cook in. DVR movies on cable or get them from your library for free.\n-stop contributing to retirement temporarily or any other savings or investment accounts. Yes, even if your companies match - it's just temporary, you'll get back to investing later.\n-adjust your Withholdings through your employer to get more now and less tax return later. It's your money, may as well have it now.\n-have a rummage sale, sell any extra cars, and get out of leases if at all possible - they're a scam.\nNow - the real steps:\n1. Put $1,000 into a savings or MM account as an emergency fund (EF). \n2. Sort all your debts from smallest to largest. Pay minimum on all except the smallest. Attack that one with all the money you've scraped up (except for the EF) and your necessities (food, shelter, trasportation). Once you've paid the smallest, use what your were paying on the first plus the seconds minimum to attack that one. This is known as the debt snowball as it keeps increasing as you go. Keep it going until their all paid. Living frugally is key, during this period.\n3. Now beef up your $1000 EF to 3-6 months of expenses (not income) \n4. Resinstate future and retirement investing to at least 15% (match your companies IRA contribution, and put the rest of the 15% into Roth IRAs.)\n5. Invest in college funds for the kids if you have them \n6. Pay off the home early\n7. Build more investment and retirement wealth and start giving what you can.\n\nHope this helped! Again, don't fall into the trap of using debt vehicles to get out of debt. Pay what you owe. Live on less than you make and you'll get out of this.\n\npbaez\n\nIf you need more ongoing support, join our yahoo group Dave Ramsey http://finance.groups.yahoo.com/group/Dave_Ramsey_Debt_Beaters/
142990
WOW you packed a lot into this question!\n\n1. Real Estate investment in a primary residence is typically a good idea.\n2. You say you have okay credit.  Does that mean you owe a lot or you have some derogatory credit on your profile?  This would affect your ability to qualify for a loan from both a debt ratio situation or challenged credit issue.\n3. A rent to own, lease option, or contract of sale it typically a good way to go if your credit is questionable as you may not be able to obtain traditional financing.  You would need to find a seller willing to cooperate with this type of financing.\n4. If you buy outright a Realtor is always recommended.  There is no cost to the buyer.  The seller bears the burden of all costs incurred.\n5. If you use a Realtor they can assist you in finding a source for financing.  Generally that would be a loan officer the Realtor has an existing relationship with that can cater to your individual needs.\n6. Lastly you say you are starting a new job.  Typically a lender is looking for 2 years in the same line of work with your new earnings similar to your past earnings.  If your new job is a significant increase in pay, the lender will evaluate your ability to secure employment for the same earnings should you lose your new position\n\nI know how overwhelming all this can seem to someone who is unaware of how the process works.  Don't be discouraged.  You may contact me if you need further help and if I know the answers I'd be happy to share my knowledge.  \n\nGood Luck!
213251
and two became one, yep.  you inherit the wealth, unfortunately, except you will still have 2 individual credit scores.  i was in the same situation, it was hard getting our house cause he made more money but had the credit problem, but as long as everything is paid to date, and the credit bureaus have been updated most places will look at that and take it into to consideration, you should be ok.  if he still has bad credit and outstanding bills, try to pay them off and close them yourself, it looks alot better than if they close them for you.  and even if you couldnt pay them off, sometimes calling them, they will make a settlement amount and you could be better off then if they take it to a collection agency, ive been through this, im soooooo glad thats over.  i bet you werent to happy with him about this, just try not to yell at him about it, he probably already feels bad enough, just work with him, and you be in charge of the finances.  good luck.
248319
Try out A+ Financial their interest rates are really low and the payment are cheap. They even have free advisors come to your home to discuss it all with you. Depending on your debt ratio you might need a co-signer but it is a really good company... I went from paying 870/month on debt to 246/month for 5 years. Their rates are lower than 6%
254814
Ok, a second mortgage is when you still are making your original pmt., but you take out what is called equity that is built up in your home. Say you bought your house for 100,000, and now it is worth 200,000. Now, most banks use the 80% rule. You take the 200,000 and subtract what you owe still on the house- say you owe 85,000. So, you have 115,000. Now, what is 80% of that? 92,000. So, you could get an equity loan (or a line of credit) up to 92,000. Now, say you borrow that, you will owe money on that. Technically, banks call it an equity payment, but a lot of people call it a second mortgage, because it is a loan against your home. A line of credit is a bit different in that say you get the line of credit for 92,000, but you only use a few thousand here and there. You only pay what you use. Say you pay it off, and then a month later, decide to use it for a vacation, then you would owe again.
38109
This is a tricky question to answer because it depends on the problems you have on your credit, what your scores are (you might not need to do anything to get the intitial mortgage but your rate will be higher), how long ago the problems occured, what the ballances of your good revolving accounts are, how many open lines of credit you have, and how long you have had credit.\n\nThe first thing for you to do in my opinion if you are looking for a mortgage is to go into a a mortgage company and have them pull your credit. This will give them an idea of what they can, or can't do for you,a nd give you an idea of what your credit looks like. Alot of times the LO can run simulators that will show what to do to improve your score. Then you can do a rapid rescore if you want it done quick.\n\nSome words of caution about credit: \n1- paying off old bad debt is not in your best interest when you are getting ready to apply for a loan. Once you make contact with the creditopr again and try to resolve the problems you change the bad debt from being old to being current. The older the derog. credit, the less impact it has against your score.\n\n2- bringing your you used credit to available credit on your revolving accounts (charge cards) below 50% on each account will improve your score. The lower from there you take it the better.\n\n3- Once you have obtained a home loan, if you have a choice between paying your mortgage or paying on another loan, always choose the mortgage. Mortgagge lates count against you more, and are the main thing that lenders look at when determining if you qualify for future home loans.\n\nIf you have any questions feel free to contact me at the e-mail below and I will try to help you out.
392154
Not nearly as quickly as gets torn down.  \n\nSounds like you're off to a good start.  Just keep on keepin on, and maybe pick up another line of credit, like furniture.  \n\nThere are several ingredients for great credit: \n\n- Depth of credit.  10 years of great payment history is preferable to 1 year\n\n- Quality of credit: Installment credit is better than revovling credit.  Installment is taking a loan out on a something (boat, car, land, house, etc) and revolving is credit card debt (store cards being the worst) \n\n- Debt to income is another consideration.  If you have $4000 going out in credit, you need $8 - $10k comming in.  \n\nProbably the best thing you could do for your credit right now, is to buy some furniture or better yet, a piece of property somewhere for about 10-20k.
8477
I can speak from experience here.  I do not have a very high score I think it is in the low 600's.  I think the main reason is that people are still able to get credit while having a score this low.  You may have to pay a higher interest rate but you can still get a car and a house.  I know I have a mortgage and I just refinanced for a slightly lower fixed rate at 4.5% interest.  I don't think that is too bad for someone with below average credit.  We all should care more about our credit. We just have champagne taste on a Boone's Farm budget.
309776
Depends on how much you are needing. Second mortgage on the house maybe (if you have one). Anything of value. Is your vehicle paid off? Just shop around. You can find a good deal with some shopping. Just remember, if it sounds too good to be true...it always is.
551157
First, how is your credit?  It's more a credit issue than an age issue.  Second, how is your employment history? With today's economy, that's a really important issue.  \n\nFrom my experience, as a second time house buyer, I was certain I would not qualify for a mortgage at great rates.  Since I hadn't bought a house in 10 years, I was recently divorced, making very little money, I knew nobody in their right mind would want to finance me.  I figured, as much as I hated the thought of renting, it may be the better option of the two (I was currently living with my parents with my two children).I had called about a rental, knowing it was out of my range, but I was desperate.  It so happened that I was talking to a real estate agent.  She ran my credit report, showing a 797, 802 and 809.  She said with that, I had no worries.  So, together we found a home and I have been here since June of 2005.  \n\nWords of advice, be sure your taxes and insurance are included in your monthly payment.  \n\nGo for it - you sound like a 20 yr. old with a head on your shoulders and are ready for the homeowner responsibility.  Do your research and be sure you are prepared financially.  Good luck!!
387534
Lenders are increasingly concerned with the level of fraud inherent in stated income mortages.  When it is a HELOC it is even tougher because the lender is in second position and there is substantial risk if the borrower defaults.\n\nCouple that with a low credit score and you have a real problem.  You need to go talk to a lender that specializes in subprime home loans.  Try Novastar.
642568
I bought my first house with the help of a first time buyer program.  I had to take one 2 hour course (free, all I had to do was show up & listen), and the county paid my down payment.  It showed as a silent second mortgage.  As long as I lived in the house, and did not refinance, I did not owe any money to the county.  When I did refinance I had the option of paying that money back or making payments just like any other loan.  I was able to close on that house for $300 out of pocket because of that program.  As another poster said, there are many programs out there.  Some will even offer very low interest loans to make improvements to your home after you move in.  Your Realtor or mortgage broker should be able to steer you in the right direction as far as what programs you qualify for that are available in the area you are buying in.
528787
One thing to remember if/when you pay stuff off (mainly credit cards) is even if you pay a card of so you have $0.00 outstanding that cad will still be looked at as potential debt, so say you have a $5000 limit & you pay off the $1400 you still have the ability to get $5000 more in debt after the home stuff goes through.\nIf you have more than 2 or 3 credit cards consider closing them so it will not be seen as potential debt, if not then pay them off & lower the credit limits to say $1000, Even at 680 it's a pretty good score so even a few months after the home stuff happens yopu can have the limit raised back up again.\nThat may help a bit. Also remember the places that report your  credit only do so about once a month so even if anything does change you may not see any change for 30-60 days.\nOh and dont pay anything late, miss payments etc\n\nIn addition:\nDue to the two silly fools below me I guess I should mention I work for the 2nd largest bank in the world. \nKeeping multiple empty card open is of no help in any way at all. It just show you can get in more debt as soon as you like & that does not look good for credit. As for raising the credit limit well thats just stupid for this persons situation. Not only will you then get more enquiries on you credit report (another bad thing) but it then shows you can get into even more debt.
272359
Your credit score could affect your ability to get a loan at the best rates.  There are plenty of companies that prey on people with less than perfect credit and offer loans that are really bad deals.  \n\nYour realtor should be able to recommend a reputable mortgage broker who can help you find a reasonable loan and understand the terms of that loan.\n\nThe less money you have to borrow the more comfortable a bank is about loaning their money to you. Banks will feel most comfortable lending you 80% or less of the cost of the house.  That's why you don't have to pay for PMI if you put at least 20% down. (PMI is private mortgage insurance.  If you default, this insurance will pay the bank.  It WON'T get YOU off the hook - you'll still owe the bank).\n\nOne way to get around PMI if you don't have 20% to put down is to basically take out a second mortgage on the house to borrow what you can't cover out of your own pocket.  However, that second mortgage ain't cheap.\n\nOther ways to get into a house without much cash is to take out an interest only loan or an adjustable rate loan.  If you are going to be in the house for a while, those loans can be riskier than a traditional mortgage since the loans are basically drawn up to favor the lender.   \n\nGood luck!
608545
Above comment about balloon payment is a good one; personally had a mortgage that seemed too good to be true, until we were signing the huge pile of papers and found one that mentioned the balloon payment -- under the terms, after 15 years, we would have paid down almost none of the original loan!\n\nThere are conditions under which this isn't necessarily a bad deal, but it involves a lot of financial discipline, and your mortgage lender probably won't help you figure it out.\n\nA bigger concern at this point is simply this: interest rates are going up, and the housing market is slowing down. You may get a mortgage you can afford for five years, but can you afford it if the rate adjusts to, say, 10% in five years and you can't find a buyer for your house who will pay what you still owe?\n\nFinally, how much are you paying in points/fees on that loan -- and is it more overall than you'd pay on interest for, say, a fixed 30-yr loan at a reasonable interest rate with no points/fees?
479503
I see some interesting responses on here.  I disagree with the reverse mortgage suggestion.  Up front it sounds great to take out a mortgage and never have to worry about paying it.  Needless to say interest continues to accrue and as this person suggested it will be paid from the estate.  Many times however it requires the estate to sell the home to do so.  I would only suggest a reverse mortgage as a last resort.  \n\nThis situation is a sensitive one as many factors come into play.  Such as what is the value of his 401K, what other sources of income does he have and what other savings vehicles are available to him.  Since he is in his 60's he can withdraw from his 401K without a penalty although he is still subject to taxation on the lump sum distribution.  This is why it is important to know what other sources of income he does have and are those other sources taxable. \n\nIf he his paying a high mortgage rate there is some benefit to paying off his mortgage, but not if this severely depletes his liquid assets.  It is a complicated question and needs a full financial analysis to see if it is beneficial.  \n\nI would however avoid that reverse mortgage option in this situation.
161783
Go with the Dave Ramsey method, pay minimum payments on largest debt while paying more on smaller ones and get the smaller ones paid off first.  Then when you get one paid off, put that much more on the next one.  I am doing this and it works!  I have lived paycheck to paycheck and have now paid off over $2,000 in debt so far in 2006.  It works!