I Need To Know If Its Possible To Combine My Mortgage
Q: I need to know if it's possible to combine my mortgage ($55,000/30yr.) and my home equity loan ($20,000/line of credit). I'm 24, single and didn't have a clue about mortgages and loans and still don't. I remodeled my grandmother's old house that she signed over to me and that ended up costing me the 55K which, of course, was loaned as a mortgage. The house was mine, free and clear, until I remodeled it which *had* to be done seeing as how it was built in 1899. Anyway, I was only making $22,000/yr. at the time and still don't make much more but for some reason I ended up with a $20,000 home equity line of credit as well. (I know why but it's another story in itself.) Well, of course I used the whole amount to pay off debts and helped my mom pay off a few too. (I don't have financial knowledge, obviously). Now I'm stuck with a $513.48 mortgage payment AND a $300 minimum payment for my home equity loan each month... not to mention I have two credit cards I'm trying to pay off, plus pay all the usual household bills, and still try to buy a little food and gas. I have NO money! I'm in such a mess. Does anyone know if it would be possible to combine those two into a brand new mortgage? I've used a few different payment calculators and a $75,000 loan with 7.75% usually comes out to about $500/mo. for 30 years. That would help me tremendously. I would actually have money left over for unexpected expenses - everybody has those every month. Anyone have any helpful information - other than get a financial clue?
A: > Now I'm stuck with a $513.48 mortgage payment AND a $300 minimum > payment for my home equity loan each month... not to mention I have > two credit cards I'm trying to pay off, plus pay all the usual > household bills, and still try to buy a little food and gas. I have NO > money! I'm in such a mess. You are "house poor"...your house eats more than you do, and you have to keep running full speed just to keep up. Welcome to the middle class nightmare. > Does anyone know if it would be possible to combine those two into a > brand new mortgage? I've used a few different payment calculators and > a $75,000 loan with 7.75% usually comes out to about $500/mo. for 30 > years. That would help me tremendously. I would actually have money > left over for unexpected expenses - everybody has those every month. What you would do is apply for a new mortgage. Your current lenders will likely not want to deal with you, but you may want to check with them first anyway--that might save on closing costs. When you go to a new mortgage company, let them know that you want to refinance your existing loans. That is, the new loan will pay off the old loans. On the upside, you will likely end up with a better interest rate, and the overall payments will be lower. The downsides are that with everything in one loan, you will likely have to pay PMI (mortgage insurance) unless you have 20% equity. PMI is flush money, a total waste of cash, so avoid it if at all possible. You will also have to pay closing costs, and a new mortgage initiation fee. They may also hit you with points, but again, avoid them when possible. You may also need a new appraisal, and perhaps a new title search, plus a new credit report. These all cost money. Finally, there is the question of whether or not you will qualify. To get a normal "conforming" loan, you need to meet certain debt and expense ratios. These are 28% and 36% in most cases. That is, this loan can be no more than 28% of your gross income, and your total