Comments on: My New Refinancing Idea: Brilliant or Stupid?

By: J. Money

J. Money — Tue, 29 Jan 2013 18:01:38 +0000

In reply to Travis.

Yeah! That’s an idea we’re actually mulling over too – if we can find a card w/ no fees for balance xfers/etc. 0% interest for 18 months would be the perfect amount of time to nip it all in the bud and pay it off in full after the term’s over. I don’t know if I’d have the balls to pull the trigger on it in the end, but I’m definitely considering it ;)

By: J. Money

J. Money — Tue, 29 Jan 2013 17:59:50 +0000

In reply to Carla.

We already live pretty much on one income and I have tons of savings in the bank plus investments so that part isn’t a problem. (And not debt outside of these mortgages too).

If I owe the bank $100k or a friend $100k how is that much different? Besides all the paperwork/gaming the system/etc… that part ofcourse gets wonky, but financially wise I think we’re still fine. We don’t *need* to refinance or get out of mortgage debt faster, I just prefer it and am always looking for a work around ;)

By: Carla

Carla — Tue, 29 Jan 2013 17:12:49 +0000

This is a really bad idea…. If you want to get out from underwater this badly, you need to get professional help. What are you going to do if one of you gets sick/hurt, you’re down to one income, medical bills pile up, and you have a pile of personal loans, plus a mortgage? No savings, tons of debt. Shuffling isn’t fixing. If you’re not planning on moving, sit still and stomach the interest rate. Being underwater doesn’t matter if you don’t plan on selling. And banks do see debt shuffling, and they don’t smile on it. Besides, you’ll need legal notes for each of these personal loans, and the cost for that isn’t small. If I were you, I’d relax, plan on staying put for a while, double down on payments and wait. Home prices are up. Order an appraisal every year or so to see where you are. Being underwater won’t put you into bankruptcy, but being cash poor and debt rich will.

By: Travis

Travis — Mon, 21 Jan 2013 16:39:42 +0000

My dad is in a similar situation as you except it is with an investment property. Have you looked at the makinghomeaffordable.gov website? I think there are some options for you there. My dad is being held back because has a loan with a small servicer (Bay View Loans) and it isn’t his primary residence. If I were you, I would take a long hard look at that website before making any ninja moves with your money. They even have programs to help take out the HELOC.

One other thought I had was potentially doing a balance transfer using high limit credit cards and send the money to a bank to pay off the HELOC. I am not sure what your Credit Score is, but I would think between you and the misses you could potentially pay off the heloc today. Most BT offers are for 18 months and you could apply your extra $2,000 to the credit card payments instead of the HELOC or first mortgage.

By: J. Money

J. Money — Mon, 14 Jan 2013 15:15:56 +0000

@melissa – That’s what I hear too, but for whatever reason they never say that’s an option for me? Maybe my type of house doesn’t fall under that or something? I’m going to try and get a more detailed answer the next time I call – which will probably be this week :)

@Evan – That is a minor worry of mine, but from what I hear they use 2 years back of records which I’m now officially over :) Been on my own for 2 years and 1 month – woo!! And also, I’ve made more on my own than w/ W2 “real work” so debt-to-income should be even better… but really who knows once the process gets going – all great questions to ask though and get a confirmation on, thx ma.

By: Evan

Evan — Sat, 12 Jan 2013 17:34:20 +0000

THere were too many comments to go through everything but what about debt to income ratio stuff? Also you are now self employed (vs the wonderous w2 in the past). You may jump through all these hoops only to be denied b/c your self employment history is not long enough or your debt to income ratio on the new note is too high (especially if you have a 10 or 5 year amortized note…although you could do a demand note at 1% and then change it up as soon as you close to a 5.5%)

By: melissa

melissa — Sat, 12 Jan 2013 02:01:25 +0000

Last I talked to usaa they were doing refinances for 95% of the appraised value so you may not Need to come up with the full amount for the refi… this was only 2 months ago so it may be worth a phone call

By: J. Money

J. Money — Thu, 10 Jan 2013 17:35:09 +0000

@scott – Very interesting!!! And damn that’s clever, haha… you guys are good here with all the work arounds, I love it :) And even better that you were able to refi with only 10.5% equity! That would change a LOT of things on this end if that were the case, so I’ll most def. be doing more research here – believe me. Really appreciate you spending the time to share this CD idea with us – means a lot.

@JoeTaxpayer – I knew I liked you for a reason ;) Really REALLY great perspective indeed. And makes me mad that I’m so NICE all the time! Haha… I know I could be a dick and threaten to walk/etc (and then ACT on it too!) but my poor little heart just wouldn’t be able to do it… making me a suckier business man too – this wouldn’t be the first time I screw myself for not being more shrewd :(

@Yo Buddy! – You’re actually the second person to mention this route lately, and I think there *may* be something too it – I just have to research more. I know I couldn’t get at least $35k of it back cuz that’s only to wipe out the undewater part, but the 20% down? That might be something!

By: Yo Buddy!

Yo Buddy! — Wed, 09 Jan 2013 22:03:14 +0000

Can’t you do this backwards? Refinance with all of your available cash. Then after you’ve closed, get a HELOC to replenish your cash account?

By: JoeTaxpayer

JoeTaxpayer — Wed, 09 Jan 2013 16:52:49 +0000

The system is broken.
When people such as Donald Trump arrange their investments, they do it in a way that they have power over the lenders, file for bankruptcy on one property but not the other, as each is a separate legal entity. He didn’t create his own wealth, ever dollar can be traced to an investor he screwed.

As for you (I’m speaking hyperbolically, you can’t do this) – go to the HELOC lender. Tell them you plan to walk away from the house. Since it’s worth less that even the first mortgage, the HELOC lender will have zero. Now, you have a few choices. (a) tell them you are a nice guy and will hon0r the debt, but as a personal loan. (b) offer to pay it now at say, 50 cents on the dollar. (c) something clever I’ve not considered.

Next, you go to the main mortgage holder. Tell them you are ready to walk away. Bring data showing how it will take them 6 months (or more) to get you out of the house, and once you’re out, the property will deteriorate quickly. Property tax will still be due and they will have a nonperforming loan. Show recent sales in your area, and what they’d get from the new buyer. Now, you’re willing to spare them all of this if they’ll do 2 things. Refinance you at no charge to the 80% LTV with the 3.5%/30 year rate, and finance the rest as a fixed 10 year loan you agree to pay off. This is far better than the alternative of you walking away.

If you add two zeros to the values discussed here, this is exactly what Trump did his whole career. The difference? He was far less kind to the banks. Oh, and you have better hair.

J, you are in the crazy grey area, someone ready, willing and able to pay your mortgage, but underwater and stuck in a jamb. The banks should negotiate with you, not push you away.