My parents are selling their house to buy another closer to me.  They have good equity in their house and are making a profit too.  They are thinking of paying off their credit cards ( to the tune of $60,000) and then using what is left as their downpayment on the new house.  This will make their mortage payment higher, but they won't be paying the credit cards each month like they do now.   They wondered if this was a smart thing to do or should they put as much as possible down on a new house? My friend told them not to close any of their credit cards either, and my friend suggested maybe paying off the cards that are charging the most interest and leaving some owned money on the cards---not to pay them to zero.  Maybe someone here can suggest what is best all the way around for them at this time.
209177
The answer to this question depends on a lot of circumstances that are specific to your parents, so no one will be able to give you THE correct answer.\n\nThat being said, there are still things to consider:\n\nSuppose your parents owe $100,000 on their current house and $60,000 in credit card debt. Let's assume that's all of their debt - a total of $160,000. Some of that debt is being repaid at a mortgage rate (what that number is depends on when they took out this mortgage), some of that debt is being repaid at credit card rates (again, these differ depending on the cards). \n\nFor the sake of argument, let's say that the mortgage rate is 6 percent and the credit card rate is 14 percent. Without doing the math (which would require a whole new set of assumptions about the term of repayment, etc.), I think it's easy to understand that repaying a loan at 6 percent is "cheaper" than repaying a loan at 14 percent. (Remember, the "cost" of a loan is really how much interest you'll pay during the repayment period).\n\nNow suppose they take the same $160,000 debt and refinance it, but now, all of the $160,000 is borrowed at 6.5% interest, rather than some at 6 and some at 14. Again, it should be apparent that the "cost" of paying back the $160,000 is "cheaper" at 6.5 percent than it was at 6 and 14.\n\n(Remember, however, that the sale and purchase of homes are associated with significant closing costs. In my area, closing costs average about 3 percent of the value of the transaction for buyers and maybe 1.5 or 2 percent for sellers. Since your parents are both selling and buying, they'll face closing costs on both transactions, and the sum total of these costs will be a significant amount.)\n\nAs for your question about closing credit cards - Credit worthiness (your ability to borrow) is based on your credit history. Banks and other lenders are notoriously reluctant to lend money to people who do not already have credit from other lenders. Part of what goes into their analysis is your ratio between credit available to you, and credit actually being used. \n\nYou might think that lenders would prefer to lend money to people who don't have any other outstanding debts, but in reality, it's the other way around. Having an established credit history, using those cards frequently, carrying a reasonable balance, and scrupulously paying them back on a month-to-month basis are all big plusses when it comes to borrowing. \n\nAnother thing that may surprise you is that lenders are more interested in how you are managing your money right now - and not AS interested in your past payment history. The fact that your parents maintained balances for many years and paid them off is not as powerful a "recommendation" for future credit as the cards and balances that they have at the time they apply for more.\n\nIn other words, it's good advice not to close out all of your credit cards. Pay off balances on cards that have the highest interest rates (they're costing you the most), and keep paying off those lower interest cards on a monthly basis.\n\nRemember - this is just generic advice - your parents may need to retain more liquidity with their money, because of their own unique circumstances (age, health, needs of the children, etc.). Real estate has been a tremendous investment for many years, but it's notoriously non-liquid, meaning it takes a lot of time and a lot of expense to get equity out of a home. Other investments (stocks, bank accounts, etc) may have lesser returns, but provide much faster access to money when an emergency arises.\n\nDefinitely speak to a financial advisor who knows your parents' unique circumstances before committing to any particular plan of action.\n\nBest of luck to you and your parents!
446116
Bad Idea. I find it hard to believe you'd get a better rate on a student load by using the mortgage (unless she didn't go through the gov't but only through a bank or used credit cards otherwise, the rates are extremely low and you can take lots of time to pay back). \nTrying to build a little equity? You must already have some equity otherwise you couldn't do this. They are not going to consolidate it into a loan for more than the property is worth.\nWhy waste that equity you have now already on something low interest, that you can take a lot of time to pay back.
614605
yeah, but it would be silly for small stuff like that. Try getting a "sears" or "lowe's" card first- you should be able to get a high enough credit line from them to buy those things, because refinancing your home, getting a second mortgage, is going to cost you MUCH MORE over the years when you are paying it back.
117685
If you are definately going to be selling off the house in two years, then just paying the interest is a smart thing to do.  What will happen is that when the house sells, both mortgages will be paid off and you will have the balance to invest in a new home.  The only way you could get in trouble is if your plans change for whatever reason or you are unable to sell your home for it's full value.  Just make sure you are not just spending away what you would have been using to pay down the mortgage and it is being saved or invested.  A number of people get caught in that "spend everything" trap.
193061
Basically your bank will loan you money based on the value of your property. There are loan ratios so lets say they have a 10% ratio (I think thats normal although others demand more or less depending on the area). That would mean you can borrow up to 90% of the value of the house. If the house is 100K you could borrow 90K. Now if you only owe 50K because you bought it a a few years back and it has gone up in value then your bank will lend you up to the 90K (or an extra 40K) for you to do whatever you want with. Its a cheap way to finance debt for purchasing things like cars, holidays, extensions...than using a credit card or personal loan BUT it means you are putting those things under your home loan and if you dont or cant pay then they reposses your home. You would start by going to your bank and having the home valued by a professional they recognise to see how much you could borrow. A good bank will pay for this service for you as long as you take out a loan with them. You generally set up a new loan (which means a new fee) and then your back to normal. Your home loan repayments will go up but they should be able to calculate these for you so you know what to expect. Remember interest rates are on the rise so factor that in. Happy spending.
572086
I have heard that it is best to keep about 30% balance each month, and be sure to keep paying them off.  I went up to about 50% and payed a lot off each month and my credit score skyrocketed
34645
Can u refinance a home?  Home equity?  My b/f has the same problem.  How is your fico score? if it's high then get another cc.  The higher your income...the more credit they will lend to you ....hint hint....and then consolidate on that card.  when the credit companies see that you paid off all the debt they will give you another card...then you transfer the balance to taht one or another with a 3.9 or something like that til the loan is paid off.
167426
Yes and no.\n\nI have purchase a house in short mortage basis and another on a longer mortage.\n\nYes, it will put your payment issue over as quickly as you can, straight up your budget/finance and become liquid again in 2 years.\n\nNo, my opinion as a person having monthly paymnent on home, by paying off early, your business relation with your banker is only that long, not long enough to establish a better relation. \n\nOne thing I learn from a CEO, you don't always borrow money from the bank because you are financialy short, you borrow because you need to establish a relation with the bank, in a way that someday when you need to have a credit line, bank knows you enough that they can give you the loan instantly. By having a longer term payment, making your payment on time, keeping a good record, you become a favorite client of the bank.\n\nAnd someday, just maybe someday you have a good business opportunity, your bank will be your saviour.
71014
I'm not sure you read the story right.  Credit card companies aren't really excited to increase the minimum payment amounts.  They are adjusting their minimum payments in response to a change in government guidelines.\n\nFrom what I've read and heard, a number of companies are afraid that any increase in minimum payment is more likely to result in increased default rates, and thus to greater loss of money, not lower.\n\nAs for the idea that increasing minimum payments would increase income for them, while it might increase cash flow in the near term, I would think it would decrease profit in the long term since people would pay off their debts earlier (and thus pay less interest in the end).
614619
Really straight forward:  no unsecured debt.  If you have credit card debt get rid of it.  Use your 25K if necessary.\n\nNo car payment - pay off any installment loans you have.  Use your savings if necessary.   You wil then be able to save expedentially each month.\n\nWhat kind of house are you after with $75K down?  That's a huge down payment for a first time homeowner of any age!\n\nYour first house should not be your dream house, it should be one that you can sell in 5-7 yrs to the next first time home buyer.  \nMake sure the location supports the property.  Buy the smallest/least expensive house in the best neighborhood.  \n\nDon't buy the biggest/most expensive house on the block...lose out on equity potential.
582501
Here's a hypothetical situation that may help... \n\nSay you have three cards: One at 30%, another at 25% and another at 20%.\n\nYou have to pay them all each month, but don't try to pay them off all together. Pay the highest rate card off first and you'll save a ton of money in interest.\n\nHow to do it: Pay the minimum on the 20% and 25% cards, and then pay all you can afford to on the 30%. This will pay down the 30% card quickly, while the other two go down slowly or hold somewhat steady.\n\nThen, when you've got the 30% card paid off, take everything you were putting toward that, and put it toward the 25% card, while still paying the minimum on the 20% card.\n\nThen, once the 25% card is paid off, put all that money toward the 20% card.\n\n*** Remember: Whatever you do, don't try to pay them all down together.*** You need to prioritize, and pay the highest first while only paying the minimum on the others***\n\nAlso, don't be afraid to call up the companies and try to get your rates lowered. It sometimes works, but not for me. I threatened to get a loan at a much lower rate through my credit union and pay off the ~$3000 I owed to MBNA.  They still refused to do anything, and I followed through, and paid it off immediately.\n\nNow, I still owe part of that to my credit union, but it's at 12%, no 28.75%. The same thing may work for you. They're bullies, so don't be afraid to bully them back.\n\nDon't use a debt-consolidation company. Try to get a loan through your bank or credit union, and pay it all off. If you can do it, it'll be a lot easier.
660183
Take a look at the recent Readers Digest.  They report on scammers who buy property real cheap from people in financial trouble.  They told of this one family who was in danger of foreclosure and these "really nice people" had them sign a bunch of refinance papers with blanks on the form ("we'll fill them in for you later").  Even though they had a bunch of money in equity it turns out that they sold out their house.  The scammers then sold it to someone else as rental property, who then evicted them because the scammers failed to tell them that they were now supposed to pay rent to the new owner--naturally, not knowing, they hadn't paid rent.  Then the "nice people" were gone, with the profits.  I wouldn't touch that "opportunity" at all.
556514
'm sorry but there are many misconceptions out there about reverse mortgages. Many of them are listed by some of these replies. Yes they are real.\n\nThey were set up by FHA and heavily lobbied by AARP in order to help Senior citizens because they know that social security and pensions do not cut it for a lot of people.\n\nI recommend going to aarp to find some really helpful information.\n\nhttp://www.aarp.org/money/revmort/...\n\nor here for the most frequently asked questions..\n\nhttp://www.griffinloans.com/faqs.html...\n\nThere really is only one downside to taking out a reverse mortgage. The children are not left with 100% of the value of the home for an inheritance. From my experience and my own personal view, most children would want their parents to live their life to the fullest and don't care if part of their inheritance is reduced. It is YOUR home and you worked hard to pay for it. You should enjoy the benefits of it.\n\nThe house is still in your name it just shows that there is a mortgage on the home like any other conventional mortgage. You can take the full amount in a lump sum, split it up in monthly payments or leave it in a line of credit which right now has a growth rate of about 7%. With the line of credit you are only charged interest on what you pull out of the line of credit and that interest rate right now is right around 6.5%. The rest of the money sits there untouched until you need it. These loans are set up so that there should always be equity in the home to pass along to your heirs. Also, you can repay the loan at anytime with no prepayment penalty.\n\nAll of this money is tax free and there are no monthly payments to make. You CAN make a payment if you want and are concerned about keeping the balance down. You even get a tax break if you pay back the interest you are being charged.\n\nThis is a much better option than a home equity loan which you have to make high monthly payments and if something happens and they get behind could lose their home. With an FHA reverse mortgage there is NO way to ever lose your home or be foreclosed on.\n\nSo really the only downside to reverse mortgages is that the heirs wouldn't get 100% of the home value for your inheritance.\n\nI'd be happy to send you some more information if you would like. This is what I specialize in and our company can do reverses almost anywhere in the country. If you would like some more information please email me at bburns@griffinloans.com
183298
A HELOC can be a good tool for reducing your interest rate burden --- IF, you have the self-discipline to avoid running up debt elsewhere. The downside is that if you are unable to make your payments, you've put your shelter at risk and it's not fun to sleep on a bench. Further, there is no absolute rule/law that real estate values have to appreciate (the have and can go down).  If your HELOC comes due after a decline in RE values, you may be forced to pay-off at its maturity - and if you don't have the funds to do so, sell in a down market in order to pay-off. My advice would be to not use a HELOC for debt consolidation; but, to systematically pay-off those other debts.
621020
From a pure mathematical standpoint, the quickest (and cheapest) way to pay off credit cards is to pay off the cards with the highest interest first.  This is because as your balance with the highest rate diminishes, the amount of interest accrued on the remaining balance diminishes as well.\n\nHowever, many advocate the "debt snowball" which endorses paying the card with the lowest balance first, then moving progressively to the next highest balance as each card is paid off.  This works for some people from a psychological standpoint because they see quicker results as each card is eliminated.  For some, it has been the only method that worked.  There is no doubt, however, that you will pay more money overall through this method, all other things being equal.  This method is most closely identified with Dave Ramsey.\n\nNegotiating with all the credit card companies for a lower interest rate is a good idea.  If they are not interested in lowering the rate, you can bluff them by threatening to transfer your balance to a lower interest card.\n\nBalance transfers are a tricky thing.  In many cases, a credit card company will assess a charge for a balance transfer.  Make sure that you read the fine print before doing this.  Also, some cards have a separate interest rate for balance transfers vs. purchases.  Do not be fooled.  Good luck!
28177
PAY IT OFF IN FULL!! if you have the money, pay it.    I can't stress that enough.  Take it from me.  I was young and foolish and thought what some people do.  I racked up my cards and had the plan to pay them off slowly so that I could "build my credit"  This is not what happend... What actually happend is I *** BUILT MY DEBT ***  Don't attack your credit from this angle.  Credit is not a matter of holding a balance.  You will NOT get better marks or a higher credit score for holding a balance in your accounts.  What you WILL get is more interest to way you down.\n\nIf you want to have great credit just remember not to be late on any bill - utiliies and mortgages included.  Don't miss payments.  Keep small balances if you must but try to pay them off 100% if you can.  Don't live on borrowed money.   Good rule of thumb... if you will not have enough money to pay your CC bill in full when the bill comes - you shouldn't be buying what ever it is you are looking at.  Use your credit cards for their intended purpose.  They are ment to be a tool.  Kept in your wallet so that you don't have to carry around cash every where, and so that you can have an organized statement at the end of the month to see where you are spending your money.  Pay it in full and after years of doing this it will gradually bring your credit score up and up.  There is no FAST way to build credit.  the most crucial factor in the equation is PASSING of TIME.  As long as you are paying everthing by the due dates, with no misses You will be golden :)   Time will keep ticking away, and your credit score will keep rising.  (Keep your oldest cards open - even if you don't have huge balances on them - They still count towards TIME )  If you want to keep a steady payment history going from month to month I would use it sparingly and then pay it in full each month.  \n\nCredit cards show on your report -  they will either show that there is no balance or that there is a balance.  So don't worry about them not reporting for several months if you don't have any outstanding debt.  This is NOT a "ding" on your credit record.
501081
Use the money for a down payment on a house and use the credit score to your advantage by getting a low interest rate. You might consider buying a duplex that has good potential, and then charging over what you owe on the loan. Then you could eventually save up enough money to buy another house and rent it out. \n\nIt's just one idea that has worked for people that i know.