Ask MetaFilter questions tagged with finance and mortgage

Help! Credit card elimination or consolidation?

antipode12 — Sun, 06 Dec 2009 09:31:20 -0800

Help! -- My credit debt is nearly $50,000, my mortgage is upside down by 25% and my fiancee walked out the door a month ago. I can't make my bills. I'm trying to sort out which route to go with the credit cards. A service like CCCS? Or some other route like Credit Elimination? Please help me understand this. Thanks

Should I buy a home?

Anonymous — Sun, 29 Nov 2009 18:16:38 -0800

I'm looking to buy a home, am I ready to finance this? I have about $35k in private student loans at 5.25%, no other debt. I've been pre-approved for $150k at 5% for a 30 yr fixed and I currently have about $25k in cash. The homes I'm looking for are between $140k-175k, with most being on the low-end of that band. On the high end I'd be paying just shy of 25% of my monthly take home pay, which seems like a lot.

I'm a first time buyer so it looks like I would get the tax credit along with being able to deduct interest payments.

I would only be in trouble if I were to lose my job within the year, as I plan on using all but $5k for down payment and closing costs. I'll still be saving around $300 a month. I'm young and single, I would expect my salary to rise in the field I'm in, but the economic collapse taught me that nothing is set in stone. Any thoughts on how if this is a good idea or not? Am I missing anything?

Pay down the mortgage?

acoutu — Fri, 13 Nov 2009 13:19:11 -0800

Should they pay down their mortgage? My friends, who think I'm a financial guru, have come to me seeking some advice on their mortgage. However, while I have an opinion, I thought I'd ask the folks here at AskMefi too.

Should they pay down their mortgage?

Due to several unexpected windfalls, my friends have about $100k in the bank. They have earmarked $25k for retirement savings, general savings, a trip, and so on. They have ample emergency savings and decent retirement savings funds already, as well as college savings. Their car is paid off. They have no debt outside their mortgage. They live on one income and use the other to pay down their mortgage. They have 2 children and one parent works part-time, while the other has a very good job. When the other parent returns to f/t work, their income will rise substantially, but they are already in a very comfortable household income bracket.

My friends can pay up to $65k as a balloon payment on their mortgage each year. They have previously made several balloon payments, but none this year.

Their current *fixed* rate is 5.89%, with 2.5 years left in the term.
Their marginal tax rate is around 35-40%.
Their mortgage payments are around $2050 a month.
The outstanding balance is now $275,000, down from $350k when they bought 2.5 years ago.
Their condo is worth around $600k and is in downtown Vancouver.

If they break the mortgage, they would pay an interest rate differential of about $17k.

They could refinance at around 4% fixed or 2.2% variable, give or take.

They have excellent credit.

My friends think they should pay down their mortgage by $65k, so that they get a 5.89% return with no tax. This will reduce the burden of a mortage (in a city where a house is $1M) and also mean that, when the term is up for renewal in a few years, they can shorten up the amortization or else benefit from much lower payments. They don't think it makes sense to break the mortgage ,since, over the course of the entire mortgage, they would actually save much more by applying the $17k penalty against the mortgage instead. Besides, they have money sitting in the bank.

Does it make sense to pay down the mortgage by $65k?

Thanks in advance.

Use cash to start a business or for a down payment on a home.

mintchip — Tue, 01 Sep 2009 18:40:50 -0800

Use cash to start a business or for a down payment on a home. I have been interested in having my own business. I have read business magazines for years and have even had a couple of small service-based businesses that I ran part time. No big bucks there but a rewarding experience.

Recently I've been considering trying to start a business for real. I have a small sum of cash (between 10-20k) I've been slowly saving for a home down payment.

It's a tough choice. Since I need a home to live in, buying one would mean an investment in my future and security. However, chances are that I won't get rich working for a private company. In fact, it's quite hard to get ahead nowadays with most of the good middle management positions gone. Meanwhile, most of the people I've known who did quite well for themselves did it by owning their own business.

I'm not saying it's easy. I'm just thinking that owning a business seems like my best shot at getting ahead, and it also happens to be a genuine interest of mine. At the same time, starting a business is a huge risk (I think it's something like 4 out of 5 fail within 5 years) and I could lose the money as well as a lot of time and energy.

I believe I have many of the qualities that would contribute to success in business. But it's hard for me to know if I have all of them.

What's your take? How have those of you who have been in a similar position weighed the pros and cons of such a decision.

Have lots of money, but denied mortgage, what now?

Anonymous — Sun, 05 Jul 2009 20:58:17 -0800

My fiancee and I recently applied for a mortgage on a $200k property in Portland, OR. We have a lot of assets (at least I think so), but were denied for a mortgage loan where we would have put 20% down. Why, and what can we do about it? [Posting anon because of personal finance information]

Right now we have approximately $75k cash on hand, $15-20k equity in our current home (which we are selling), we own $100-150k worth of undeveloped land in northeast Georgia, a car that is paid off (worth $19k on KBB), and zero debt. We both have excellent credit ratings.

She is a freelance web designer (telecommute) and pulls in $45-60k per year. I'm a grad student on a $16k salary, working on an MS which I will receive next May. In the past I have made $44k per year, so I'm not too worried about job prospects.

We are both still a little stunned that we were denied the loan. The loan company just refused us flat out, didn't even send the application to the underwriter. They said that our combined salary wasn't enough to get approved, since my fiancee is self-employed but has only been officially this way for the past couple months and they can't include her former salaried position as income on the loan application, which we don't really understand since money is money (?). She has been pulling in more than $40k/yr for the last 5 years.

(FYI, she currently has an arrangement to work nearly full time, at a higher hourly rate, with her former full time employer... the only reason she's not on their employee payroll anymore is because we moved out of state, and due to some complication in tax law they had to move her to contract status).

What can we do now? Should we apply with another company?

I feel like we are in excellent financial shape, with enough money to put 20% down and still have $ left over to cover 2+ years of mortgage payments!!! Like what the hell, is anybody getting a mortgage these days?

Should my refinance warrant such a long delay?

Anonymous — Wed, 06 May 2009 11:22:05 -0800

Should my refinance warrant such a long delay? My current mortgage servicer is working with a local mortgage lender to help me refinance my 7 year ARM which resets in 2 years. They offer $5000 in closing costs. A good deal by any measure as I will go from my current 5.62 to about a 4.88 rate or maybe less these days at no cost. Nice.

And I want to add $30000 to get solar panels and participate in tax credits returning 80% of that. Nice.

So, I applied for this in late January, and it still hasn't finished. This mortgage specialist has strung me along with 'just a little longer' for this time, and explained that Fannie Mae was wanting to double check these in case we would not be able to do this refinance without the incentive from the servicer. That was March.

Credit-wise, we are in the superior range, savings-wise, we are average (meaning we have very little), but income-wise, we do okay with steady work and have $75,000 in equity in the house. There's some student loan and credit card in there, but also some retirement and investments that balance reasonably. We're not talking mega-mortgage here, just $178,000 including the extra $30,000, for a roughly $225,000 house. Seems not-too-risky to me. I'd be willing to cut the panel project to get this taken care of, but the dude hasn't indicated that this would help.

Does this make sense? I feel bullshitted, but I don't want to walk away from the free closing costs. I see no reason for him to waste either of our time. I know of other refinances that took two weeks.

I'm self employed and can't get any love from the lenders

Scientifik — Tue, 14 Apr 2009 15:08:08 -0800

How do I get a mortgage if I'm self employed? I'm self employed, have been so for about 2 years, business is doing very well in spite of the economy, I work from (a rental) home and have decided its time to buy a house. Nothing too fancy just a little 2 bedroom where I can work and play and all that.

I have good credit, a good chunk to put down but whats killing me is lenders are looking only at my 1040 Schedule C which is my income after all of my deductions. Basically the amount I'm taxed at. I make all the legal deductions I can so I don't get brutalized by the IRS however this makes my income look significantly lower and basically impossible to provide funding to.

No one at the bank has any answers other than either "Make fewer deductions" which means I'll pay significantly more in taxes, which means I can't put any money into savings. Or "Save more money" even if I save every penny I won't be able to buy a house for at least 5 years at which point who knows where housing will be.

Are there any lenders who specialize in the self employed or are a bit more reasonable and take more into account than just your tax returns?

Are there any options I have other than "wait"?

Buying a first residence in a major city: can it be done?

cranberrymonger — Mon, 13 Apr 2009 09:41:50 -0800

Buying a first residence in a major city: can it be done? I live in Toronto, but I think this question could apply to other major cities. I talked to a banker and found that with my current income ($40 000) the maximum mortgage I could get is around $150-175 000. I couldn't find anywhere even close to downtown or near the subway stations that was less than $300 000.

Toronto MeFites: What are the cheaper but still TTC-accessible neighbourhoods?

Any downtown condo/apartment owners: How did you afford this?

Is it possible for a first-time buyer to make a mortgage work on a single income?

Passive income stream which covers your mortgage

lilyflower — Sun, 12 Apr 2009 04:23:43 -0800

What would you do if you had a passive income stream which covered your mortgage? I would like people to consider the following situation and give us their opinions on what they would do. We would like to hear how MeFi's out there would respond to having a similar financial position to the one I am going to describe below. This is one that my husband and I are currently entering and although we have our own ideas on how we would like to proceed, we were wondering how different people would approach the same circumstance.

My husband has developed a passive income stream which has consistently brought in enough money to cover our mortgage (approximately $2200 per month). We both work and prior to this passive income stream we still had enough money to cover all of our monthly expenses and save. We have an idea of how we would like our life to pan out, but we are really interested to know how other people might behave given our situation.

Would people turbo charge their pensions, pay off their mortgage faster, rent out their house while they move to different countries and work while they travel, have a child and one spouse no longer works, go part time and earn enough to cover the remaining bills?

I would like to clarify that this question does not concern the long term viability of the passive income stream. I will be happy to clarify my question further but please remember this is more about what you would do with your life given this income stream.

What is the starting process for refinancing a home?

davebug — Fri, 03 Apr 2009 14:21:00 -0800

I've decided it makes sense to refinance my mortgage. I'm going to call the mortgage broker I used for my initial mortgage. a) Where else should I call (and how do I find them?) b) What questions do I need to make sure I ask of everyone? I know the common stuff, fixed interest, no points, probably going 30-year, but may see if I can afford 15-year.

What's bad about FHA loans?

RobotNinja — Mon, 23 Mar 2009 07:45:31 -0800

Should I take this FHA refinance, or wait for the new mortgage plan to take effect? Update to a previous AskMe. I bought a house in 2007 around the peak of interest rates, and am looking to refinance now that rates are low. Like a lot of other people, I'm having problems getting a conventional loan since decreased home values have led to an increase in my loan-to-value ratio. However, my mortgage broker tells me I can get an FHA loan and has written up an estimate. My current mortgage seems to be backed by FreddieMac, so I ought to qualify for the new mortgage assistance refinance plan, but my lender doesn't have guidelines set up for the program yet.

Currently I don't pay any mortgage insurance because I have a 2nd mortgage which brought my primary loan below an 80% L-V ratio. Under the FHA loan, I will have to pay mortgage insurance, but my monthly payment will still be lower than it is currently. My understanding of the new mortgage plan is that I would still have to pay some sort of insurance, but I might save a little bit at closing because appraisals may or may not be required - my lender requires 2 independent appraisals for high value FHA loans. So should I take the loan at 5%, or wait for the new mortgage plan? What is the down side to an FHA?

How can I lower my interest rates on my credit card and mortgage?

Anonymous — Wed, 08 Oct 2008 17:54:17 -0800

How can I lower my interest rates on my credit card and mortgage? Greeting and salutations fellow MeFites,

Is it likely, possible, or wise to try to persuade my creditors (credit cards and mortgage company) to lower my interest rates by just asking them nicely. I hope this questions doesn't sound too naive or foolish, so please save the lecturing:)

First some background. I have a pretty decent amount of debt. Roughly about 23K in debt, all with 16% apr and up, on 5 different cards...(I know, I know!) My mortgage is 209K with a 5.99% 30 year fixed. I rent out one side to a tenant and live in the other side. My income has ranged from 65- 45K in the last three years. This year, however doesn't looks so good. And with all of this economic turmoil it doesn't look better for the near term. Or the far term for that matter!

I work in the commercial construction field and needless to say, things have been drying up as of late. Work is pretty slow, but It has given me the opportunity to peruse training in another line of work that will hopefully turn out to be more lucrative in the long run. However, in the short term, I have not been this broke in years! I pretty much have used up any saving that I had this year because of lack of work and the remodeling my house/duplex.

How likely is it that my credit card companies will lower my interest rates If I just ask. I have only been more than 30 days late on 1 credit card in the last 7 years, and that was three years ago. Not that it matters, but it wasn't that I couldn't pay it I just made a mistake on an automatic payment option. I have missed the occasional due date now and then, but the payment is never more that a few days past due.

Any advice on how I should go about to do this with my credit card companies? Has anyone convinced their CC companies to work with them without being bankrupt or something? If so, what tactics have worked for you?

Also, Is it likely, or even at all possible that I get my mortgage company to lower my interest rates WITHOUT having to refinance my loan. I have never been late with a payment with my mortgage since I bought my duplex two years ago. As I have said, I have a 30 year fixed at 5.99.

Now having said that, I imagine that my credit score isn't great because of my debt load. Any ideas about how to go about getting my interest rates lowered on. I'm not above begging, btw. What ever works!

Thanks,

Anonymous. AKA, Ol' Debtty Bastard

p.s. I dont know if this info will help but, my mortgage pmt is 1791.00 and all of my card totally to about 580.00 a month.

Wamu failure: Action items?

everichon — Mon, 15 Sep 2008 08:04:55 -0800

We have some money in a Wamu checking account, and an equity loan. Since the word is that Wamu is teetering, what should we expect to happen to the checking account money and the equity loan? Specifically:

* If they get bought up, will we lose anything?
* If they simply fail, will we lose anything?
* Does it make sense to yank our checking account?
* What happens to your loan when your lender folds? (I know you don't get off the hook, I just want to know if there are action items).

Mortgage Mayhem

le morte de bea arthur — Wed, 10 Sep 2008 08:20:57 -0800

Mortgages, interest rates, inflation, recession (UK-specific)... what to do? So the discounted period of my mortgage will be up at the end of October, and I'll no longer be tied in. It was a fixed rate mortgage and the interest rate was somewhat lower than I can expect to get with any current offering.

My question is this: what is the most likely trend for interest rates over the next couple of years? The Bank of England, from my limited understanding, would like to keep rates steady to control inflation. Elsewhere there seems to be a belief that rates will have to fall significantly over the next year or so.

Which leaves me wondering whether I should opt for a fixed rate or one that tracks the base rate. How likely is an increase in interest rate over the next two years?

Any fiscally-minded MeFites want to express an opinion or offer advice?

Help me to be a responsible loan shark.

rmd1023 — Thu, 10 Apr 2008 10:41:56 -0800

I'm selling a piece of property to someone with a seller-financed loan -- so I make the money from the power of compound interest instead of a bank. We've got lawyers handling the paperwork for the transaction. However, I've never been a loan shark before. Suggestions for financial software to manage the loan so I can enter payment amounts and dates and such and keep the magic of compound interest accurately compounding? I'm platform agnostic among OSX, WinXP, and various linuxes.

I prefer something that's actual software instead of a service that I have to keep paying money for (Quicken and your expiring ability to download activity, I'm looking at *you* right now).

I am okay with entering the payment and date data by hand, but I'd like to be able to export the records so I can share them with the buyers periodically. I find the idea of an excel spreadsheet kind of sketchy, mostly because I don't trust my own ability to correctly make the formulae.

Is the money supply contracting, or expanding?

Pastabagel — Mon, 17 Mar 2008 11:39:51 -0800

FinanceFilter: Is the money supply contracting, or expanding, after netting all the Fed action, bank closures, mortgage defaults, etc? The dollar falling seems to signal a net increase of money supply, but this is inconsistent with the thesis of a credit or liquidity crunch. If the money supply is growing at a slower rate due to tighter lending practices, shouldn't the dollar be rising, even in the face of Fed-rate cutting? Do we know the net expansion or contraction of the money supply due to the combination of rate cuts and mortgage defaults? I understand that Fed rate cuts have the effect of increasing the money supply. I understand that lower rates lower the value of the dollar, because it puts more dollars into existence tomorrow than existed today, i.e. given a constant demand, the increase of supply lowers the price.

The housing boom that peaked in 2005 involved people borrowing money to buy houses that it turns out they could not afford. This borrowing of money expanded the money supply back then. I understand that as people defaulted on their mortgages, the money supply didn't recontract (as the money that was created was spent on the house and put into the system). But as the dominoes fell, and first the mortgage companies, then regional and national banks, then CDO-holding brokerages and hedge funds were hit and stopped lending out, there should have been an attendant lack of money (from mtge payments, etc.) to lend out to future borrowers. So the money supply in the future should be smaller than we expected it to be last year. Shouldn't this cause the dollar to rise (or fall slower)?

In other words, given the 2005-2006 money supply and interest rates, the dollar had a price. But given future lending trends, the money supply growth should be slower, which other things being equal should increase the value of the dollar, right?

Is it possible that the Fed knows quantitatively the extent of the default/CDO worthlessness problem (and future money supply contraction), and isn't revealing publicly what it knows? If so, wouldn't this mean that when the Fed cuts rates, we don't hear about the amount of the money supply contraction that the Fed's inflationary move is supposed to offset, we only hear about the inflationary part of it and conclude therefrom that the money supply is growing too fast?

Student Loans and FHA Debt to Income Ratio

Dr. Zira — Wed, 27 Feb 2008 11:35:13 -0800

Does a student loan in deferment count as debt for the purposes of figuring debt to income ratios in an FHA loan? We're looking at applying for an FHA home loan. I had a lender tell me that my student loans, currently in deferment until graduation in May, then in grace period for six months after that, would be counted against my debt to income ratio now.
The lender says that in order to not have them counted against my debt to income ratio right now, I would have to provide documentation from the student loan lender that they would be deferred from one year of closing date of the mortgage. At best, I think I could only document the current deferment and subsequent grace period (six months after I graduate). As to applying for a forbearance, I don't think I can apply for that until I'm actually in repayment and even at that most lenders, apparently, only grant forbearances for 6 months at a time. It seems weird to count this as debt now, especially since my future income from my full time job which will kick in the future won't be counted.

Is this one-year deferment doc requirement a lender-specific thing or a HUD thing?
Anybody have experience doing this?

Refinance through the same bank?

condour75 — Thu, 21 Feb 2008 07:05:32 -0800

Is it possible to refinance through the bank that holds your mortgage? Is it desirable? Is it easier? I bought a house in August with a Bank of America no fee mortgage at 7%. I'm wondering if a) it makes sense to refinance now, even just a few months in, and b), whether I should approach the mortgage holder first and see what they can do. It seems to make sense that they'd want to keep the business rather than letting it go to another company, but I'm wondering if I'm missing something, since the web seems to have little info on doing so.

Other salient facts: 30 year, fixed rate, 10% down. I'd be willing to consider a 15 year mortgage if the rate is low enough now, because we could probably afford it. We plan on staying here for at least 5 to 10 years, possibly longer.

Advice in applying for a mortgage

Anonymous — Tue, 15 Jan 2008 21:06:52 -0800

I'm applying for a mortgage, my wife is European and has debt in a foreign country but has been living here for 3 years and has a green card and a short credit history. If I don't report her foreign debt in our financial disclosures when applying for the mortgage will the bank here be able to find out? will they look?

Can I put a mortgage on hold for 1 to 2 month due a medical circumstance?

timmins — Tue, 08 Jan 2008 06:51:36 -0800

We're expecting our first child in a matter of months. My wife's employer doesn't provide paid leave so we've tried to rearrange the budget so we can soften the blow of lost income. I had a thought... can you delay a mortgage payment 1 or 2 months and add those months on the end? My wife's employer requires a delivering mother to use their paid time off and any time after that is without pay. They comply with the Family Medical Leave Act where she is guaranteed her job upon return but without short term disability there won't be anything coming in terms of income.

Granted, we're financially stable but our biggest bill (our mortgage) scares us a little and we're trying to find ways to pay it for 2-3 months along with medical bills and needs of a newborn. So, maybe we're just overreacting but we'd like to be better safe than sorry.

So, if we could simply delay payments for 1 or 2 months of the mortgage we'd be more than in clear without one worry financially. Do lenders provide temporary holds of payment and add those to the end of the agreement? I plan on calling to inquire but I'd like to be prepared. Are there any other services that provide this temporary hold?

Shopping The Mortgage

escher — Wed, 02 Jan 2008 22:23:36 -0800

How and when do I "shop" a mortgage? (first-time buyer questions inside) So, I've got a lender I'd like to work with (found via referral). But I want to make sure that I'm getting a fair deal, so I'd like to "shop around" and see that the rate/closing costs/points/etc that I'm getting are competitive. But I'm not sure when or how i should shop the mortgage. Do I call and compare before i've found the home, after my offer has been accepted / entering contract, or what? Basically, I'm looking for a timeline of the loan process when buying a home with regards to shopping lendors. And how does "locking in" a loan figure into this?

Pay off second loan or enjoy tax break?

seinfeld — Tue, 16 Oct 2007 19:07:33 -0800

Finance Filter: I have a second loan on my condo at a rate of 7.75%.. I did this to avoid PMI. I have the cash to pay it off.. 35k or so.. Is it likely a good idea to pay it off and forgo the tax breaks I'm getting on the interest, to avoid the 7.75% rate? I'll take all responses at face value.. I'd like non-professional advice before seeking a financial adviser..

Thank you

Same payment, new lender - someone's making money, right?

azpenguin — Sat, 18 Aug 2007 15:06:29 -0800

A matter of curiosity: What's a mortgage worth? Most people who have a mortgage have at some time or another had their mortgage sold to another servicer. We've had ours sold a couple of times. Here in Tucson, a major mortgage company just collapsed; their business model was to sell every mortgage they originated, but with the current problems in the home loan industry, suddenly they couldn't find buyers any longer. (And they weren't heavy on subprime loans either.)

I'm not really knowledgeable about how these things go, but since it's all over the news now, I'm wondering how it all works. So what I'm wondering is - does a mortgage get sold for the current balance remaining, for more money, or maybe for less, since the interest is the thing that makes the money on it? Or is it something different altogether?

Should I refinance now?

tom_g — Tue, 07 Aug 2007 12:02:22 -0800

Should I refinance now, or wait until my 5-year ARM "expires"? More details inside. Here's my situation: 2.5 years ago, I had a 6.5% 30-yr fixed mortgage. I was having a difficult time making my mortgage payments, and I was planning on moving in less than 5 years so I got a 5/1 ARM at 4.5%. This saved me just enough per month to be able to afford to keep the house. So, I have 2.5 years left at this rate. Then I'll have to refinance - if I still live in my current house.

Part of the problem is that I really can't afford to move at this point. My hopes of moving have been dwindling because I really can't afford to move anywhere.

So, here's what I see as my options:
1) I could refinance today to a 30-year fixed (at what seems close to 6.375%).
2) I could wait until my 5-year ARM "expires" and refinance then. This would be in December 2009.

There are problems with both options as far as I can see:
1) This would cost me almost $200 more per month. That's $200 that I could hardly afford to pay. It would really tough. So, I would struggle and pay an extra $5000 between now and December 2009. What if I end up moving in a year? Then I've paid a couple of thousand dollars for nothing, since I'll have a new mortgage anyway. What if I take #2 option, and the interest rates are around 6.5% anyway? I would have refinanced to a higher rate for absolutely nothing.
2) If I wait, couldn't the interest rate for 30-year fixed mortgages be crazy? Anything higher than 6.5% or so, I wouldn't be able to afford the payments.

I'm struggling here. I really don't know what to do. I was struggling a few months ago when 30-year fixed mortgages were much lower. Now I feel like I completely screwed up.
help. thanks

Negotiating at end of teaser rate

acoutu — Mon, 18 Jun 2007 14:52:38 -0800

Do most people try negotiating near the end of a teaser rate? When we bought our home last year, we went with a one-year teaser rate, to be followed by a variable or fixed rate based on prime minus X. The time on the teaser rate will expire in a few months. Someone I met recently suggesting negotiating before locking in -- she works for a branch of our bank and said we should try to get a better rate, now that we've had a mortgage with the bank for a while. I was wondering how to go about doing this and whether it is normal. (I'm no longer in touch with this person, who I met during a course.)

I am aware of the benefits/drawbacks of teaser rates, so no need to get into that. However, I did wonder whether others had tried negotiating for a better rate as their teaser rate came to an end. I tried talking to my mortgage broker, but he said those discussions would be between us and the bank, as he's out of the loop now.

I know how to project the costs of switching to another bank vs staying with the rate at my lender. I suppose I could use that as fodder. But other suggestions are welcome. I guess it never hurts to ask, though.