My mom has a home that she bought in 1997. She bought it for 81K and now it is worth about 350K. (It was built in 1991 and we are in southern California.)
She paid off the house back in 2004-just after her husband died she collected the 100K from the life insurnace policy. She is making about $8.60 an hour-full time-and now she will be bringing home less since her employer is going to take out about $50 a month for health benefits. She only made around 17K last year.
She is about 4 or 5K in credit card debt. Since her husband passed in 2004, she has paid down the credit card debt a lot from 7 or 8K – (most of the money came from the left over amount after paying the house off) but she is still struggling to pay all of her bills.
If my parents had not had the life insurance + if my mom had to pay the mortagage ($800.00 month) we would be living on the street now. There is no way she could afford that on her income. Is it worth it getting a home loan for 5K or 6K?
My mom has the ’99 truck (it was dad’s) and it is running and that truck is paid off. Her car a ’99-not running is also paid off. I already asked her if she wanted to rent the room out-she would rather not with her 3 little doggies. They would bark too much.
I thought that interest payments would be lower than credit cards. She is paying 22% of one of her credit cards. that is crazy! I will show this to her tomorrow. Thank you all! If I could I would give you all best answer!
Regardless of your mother’s income, she can save money by paying off her credit cards with a home equity loan or a home equity line of credit. You said her interest rate is 22%? That is ridiculous. With 350k of home equity (the value of her home), she can get a much lower interest rate to pay off her debt.’
And there is a very good chance the interest she pays on a home equity loan may be tax deductible (which the credit card interest isn’t).
I say this all the time and I’ll say it now. Your mother needs to find a mortgage professional she can trust and have them run the numbers on a home equity loan/line of credit. She will be shocked at how much she’ll save over keeping her debt on her credit cards. I can’t think of any reason to do so, even her low income. Just find someone she likes and can trust and I can’t see how she can go wrong.
She is paying too much interest fees on a regular credit card.
Options :
- getting a low-interest credit card and transfer the balance.
- Equity loans are good – make sure to calculate all fees.
Can she improve her income ? Rent a room to a student ?
Good luck !
References :
http://simple-credit-cards-and-loans.com?=yh070423
http://cleancredit365.com?=yh070423
oh my god yes, you need to go out and get a home equity loan and pay off the credit card company’s, her cards are at a much higher interest rate than Heloc would be at. she should do that with every bill she has even if she owes on a car, roll it all up and take a home equity loan for that amount out and maybe even a little more for a vacation or something nice, what you will find is her monthly payment will be less than she is pay out now so she will not only have all the bills paid off but a more freed up money. she really needs to sit down and talk to a personal financial person to take a look at her situation and get to understand how it can help her!!
References :
ok this is a great situation aslong as her credit is ok.
Here are the numbers…
With a house worth about 350,000 and being that it is completely paid off you have a lot of equity in the house. ( what the house is worth minus what you owe on it )
In order to get the best rate on your Fixed Rate Home Equity Loan ( from here on out I will call it a FRHEL ) said… like Frail – then she can use up to 80% of that 350,000
which is still 280,000 – so she definetly has enough to do what she needs.
So what you would do is call your bank or have her go into her bank and talk to a personal banker ( which is what I am ) and tell them her situation. They will check her credit and debt/burden ration. Aslong as those are ok she will be able to get the loan.
2 other things you need to figure out….
1. If she gets a check for $10,000 ( which is the minimum you can get normally ) and she pays off those credit cards will she be bringing in more money then what is going out to bill and other needs? If YES then everything is ok – if NO then she needs a HELOC ( Home Equity Line of Credit ) which she will be able to access for the next 10 years and pay interest only payments on it for those 10 years.
There is a lot more to this, I cant go into it all really. The thing I can say is to have her go into her bank – go with her for help.
References :
There are a lot of pieces left out of this puzzle….mainly how old your mother is, and general situation…you say you are living with her?
The first thing that originally popped into my head was a reverse mortgage, but that may not be practical in this situation. I like the HELOC idea too…..but the big danger is falling behind on the payments (you could end up losing your home). If her income is already stretched that becomes a possibility. I’ve seen people lose their homes for this reason.
And $17K a year is NOT a lot of money.
It might be time to discuss all this with a qualified financial advisor.
References :
Conslidate Debts With Home Equity Loan
There are various ways to obtain debt consolidation loan. You could apply for personal loan or any unsecured loan with reasonable and lower interest rate as compare to your current debt’s interest rate and consolidate your debts into this loan. But, to obtain an unsecured loan, you need to have a good credit score else you loan application most probably will be rejected.
The best way to consolidate your credit card debts or any other high interest debts is using a home equity loan. Of cause, you need to own a home in order to apply for a home equity loan. Home equity is ideal for you to consolidate your credit card debts because the interest is much lower interest rate than credit card and other unsecured loan. And the best part is it normaly have different terms or repayment periods for you to choose from. The longer the repayment terms, the lower the monthly payment is. If your current financial is tight, you could choose the longer repayment term and pay more when you are at better financial situation. Read more about it at: http://www.credit-card-gallery.com/article/134,Consolidate_Credit_Card_Debt_And_Eliminate_Debt_With_A_Home_Equity_Loan
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I work for a lending company in California and i would STRONGLY suggest a heloc. That rate are high. But I know with one of the Leander’s we use if you keep paying on time the rate keeps going down.
References :
Direct home Fiance
Brittany
Regardless of your mother’s income, she can save money by paying off her credit cards with a home equity loan or a home equity line of credit. You said her interest rate is 22%? That is ridiculous. With 350k of home equity (the value of her home), she can get a much lower interest rate to pay off her debt.’
And there is a very good chance the interest she pays on a home equity loan may be tax deductible (which the credit card interest isn’t).
I say this all the time and I’ll say it now. Your mother needs to find a mortgage professional she can trust and have them run the numbers on a home equity loan/line of credit. She will be shocked at how much she’ll save over keeping her debt on her credit cards. I can’t think of any reason to do so, even her low income. Just find someone she likes and can trust and I can’t see how she can go wrong.
References :
https://www.quickenloans.com/home_equity_loan/consolidate-debt.html