Credit Equity Home Income Line Stated

My 48 y/o sister has asked me a question and I don't want to give her bad advice. Here's her question and her stated financial info:

Should they pay off balance on their 8.25% (prime for life) credit card (with a long and excellent credit history) and put that balance towards their home equity loan? Both have high FICOs.

They currently have a 1st mortgage of $200K fixed at 4.25% until 5/09. They also have a fixed (locked in) rate of 7.65 on their home equity line at a 10-year term with a current balance of $50K ($18K avail). Their home is worth between $550-580K. They only have one credit card they use, but it's $12K (prime for life) currently 8.25% and she makes at least double the monthly payments in an attempt to pay down. They would like to eliminate the credit card debt if possible to be able to save more and not feel so stretched each month. Plus one teen now needs a car (more outflow).

Banker will lock addt'l draw and combine both for 7.6%. Yearly income $90K. Advice?
Forgot to mention that mortgage is $1375/month, she pays $700 on equity loan (min $685), and she pays $700-1000/month down on the credit card. If CC was eliminated, the banker told her the new lock on the equity loan would make that monthly payment $763, which she could also pay more down on with no penalty. She's really nervous about fooling with the equity in the home because of their old(er) age. Should she keep things as is and pay down aggressively or transfer to current home equity or other great idea? Thanks again.

That Home Equity Line is almost maxed out. I wouldn't recommend transferring the credit card balance to the Equity Line at this point because that only ties up monthly cash flow. Because they'd be paying back interest and principal over that 10-year term on the Equity vs. a couple % on credit card balance of minimum monthly payment it wouldn't be worth "saving" .6% of interest on the balance. There's also the inherent risk of running up the credit card balance again which would put them in a very tight situation.

I think in this situation what they're currently doing is fine. Keep focusing on paying down that credit card debt though and keeping the balance from growing instead of shrinking.

Good luck.

2007-09-06 12:27:31 by Bella

mortgage" 2nd mortgage "home loan refinancing" "bad credit loans" "low interest home equity loan" "home ...

I asked this question in a different section and have only gotten one response which is not at all what I am asking, so I am asking it again.

I would like to consolidate some debt. I know that the banks are having a tough time right now. I was wondering if anyone knew what the guidelines were for getting HELOCs (Home Equity Lines of Credit)? My husband and I both started new jobs recently, but we both have excellent credit? Any idea what the debt-to-income ratio is that they are looking for and if all banks are now doing full documentation loans?

I understand HOW a HELOC works. I used to work at a mortgage company. I just need to know what the current guidelines are and if I will qualify. I know the questions to ask the lenders. I just don't know how all the stuff happening with the economy has changed the guidelines since I worked there (1 1/2 ago).

Specifically:

Combined 1st and HELOCs will be 80% loan to value. How many years employment do you need to have? Can that be overlooked by the fact that we both have mid-700 FICOs? Do all lenders make you prove your income now instead of going stated income? What debt to income ratios do we need to qualify?

HELOCs are getting rare in the current economic enviroment.. The reason is because all the economic metric data is showing we are entering the worse economic environment since the great depression..

In short... Excellent credit mean nothing in the current environment. My advice would be to "batten down the hatches" and prepare for one of the worst 18 months of your life... And no I am not kidding.. Please do not underestimate this one... In modern times we have never seen economic data like this before...

Good Luck and I Hope this Helps...

2008-10-18 12:21:54 by trying2behelpful

My credit score has dropped because of credit card bills and I want to get a home equity line to consolidate my bills. I need to go SISA because I have a commission based job and I havent made enough much the past two years to qualify me, I also have very few assets right now. My home has about 200k in equity but I'm having the hardest time getting approved. If anyone has a lender who has approved them with my situation please let me know. Thanks
I live in California USA.

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.

Couple 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.

2006-11-16 12:18:42 by mangelooc

I've been paying my mortgages on auto draft every month, had one that was in default but rcvd. a loan modification for that and have been paying for the past 6 mos. I tried for a line of credit on the home w/ the most equity I have in ca, but was denied b.c. the stated income guidelines are stricter these days (understandable so)...i'm just wondering if stated income is just non existant w/ the current market?????

I would think that in this market, they will want to see at least 2 years of solid ontime payment history before they will give you a Home Equity Line Of Credit (HELOC)

2008-01-03 11:21:26 by warpedhybrid

I was in a 11yr relationship living together as husband and wife just with no papers. We have a house together the 1st mtg is in his name and the home equity line of credit is in both names. he refuses to refi or cannot due to his disability income and credit. I don't want the house, I have moved to another state. 3 yrs later I have forsed the issue now the judge has signed the order to sell the house since we cannot agree. Who Gets Paid? There is also the face that the ex refuses to give up my personal property cloths pictures. What are my options?
My name is on the deed.
It was simple refi, give me my personal items and pay off joint debit aquired. and he could keep the house. He also sold a jointly owned motor cycle and kept the money.

For the sale of the house, all the debts against the house are paid first. This means the mortgage and line of credit get paid first.

If both of your names were on the deed to the house, then you both get to split any money that is left after the loans are paid off.

If it is his name only on the title, then you better hope that you live in a state that recognizes common law marriage. If your state does not recognize common law marriage and your name is not on the title to the house, then you get nothing.

If your state recognizes common law marriage, then you would treat this as a divorce. Since the state law would see this as being similar to a divorce situation, all the money left after the loans are paid would be split evenly.

If your name is not on the deed to the house, you need to find out if you have a common law marriage under your state's laws.

As for your personal belongings. The court will force him to allow you to return and retrieve your things. Once you have a court order for this, the police will typically escort you to the home for your protection.

Keep in mind that the court will only force him to give you things that are clearly yours such as clothes and pictures etc. The court won't force him to give you half of the furniture or half of the dishes or anything like that. If you do in fact have a common law marriage and want to push the issue, you could force him to give you half of everything, but that would require hireing an attorney and persuing the issue like a divorce.

2008-12-18 12:39:57 by T T