Sunday, 7. November 2010
My Dad said "We had to sell the house, because he couldn’t afford the second mortgage." What are mortgages, and how can there be more than one?
Thursday, 30. September 2010
I am 26 years old, I have a good job with a 401k. I contribute 3% of my earnings to it and my company matches it. I also have a Roth IRA that my dad set up for me a few years ago. I haven’t paid any attention to it over the past few years, but now I want to know everything I can about it. There is currently about ,000 in the Roth IRA. I also have a home equity loan for about ,000. I hate having this debt and am wondering if it would make sense to cash out my Roth and just pay off the home equity loan. I am not in any kind of financial crisis or anything, but the equity loan has a .12% interest rate, and I dont like paying the interest. Should I cash out the Roth and pay off the loan, then look back into another Roth down the line in a few years. Will I be taxed for taking out my Roth. I live in Michigan.
Tuesday, 14. September 2010
My math skills aren’t amazing and I’m not sure how I would figure this out anyway, so maybe someone can help me. This is a real life question. We have about 60 or so thousand dollars in private student loans and then maybe 10 in federal loans. If you’re not familiar with private student loans, skip to the bottom and I’ll explain them. The rate for the student loans is currently about 9%.
We are selling our house and if we sell the house for the amount that we paid (we’ll probably get a little more), we will net about 35,000 after commissions. We’re planning on buying a small fixer upper for 75-100,000 and getting a 10 year mortgage. Mortgage rates look like they’re about 4 or so percent. I was planning on getting the 10 yr mortgage, paying it off in about 4 years and then taking out a home equity loan and paying them off. My dad said that I should either put down less and pay down the student loans even though it doesn’t pay them off or take out equity as I go and pay them down.
My hesitation to do this is that my payment on the student loans won’t go down just because I owe less, but with a HEL, I will be paying more for the time being (mtg + HEL+ student loans at the same time). It’s still doable, but I’d rather not be paying more than I have to.
So my question is this:
if I pay down as I go, will my student loans skip ahead so that I’m paying a higher percentage of my payment to the principle than interest? Or is the percentage of principle vs. interest determined by time rather than how much you owe?
What do you think the best strategy for paying off these loans quickly and for the least amount of money?
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Private student loans: they were offered for a short time while lenders were lending money like crazy and they’re not federal loans, so they don’t have the low interest rates. The interest rates on private student loans are variable, currently at about 9%, but it’s been as high as 11.5%. No one is offering them anymore so you can’t refinance them, lock in a rate, file for bankruptcy, or in any way alter the loan terms. No matter what, the loans will be at that rate and you can’t get rid of them. If our credit scores go down or we don’t pay on time or whatever, the rates can go up to whatever they want. So as you can imagine we are dying to pay these off and get them out of our lives.
"The value of the "fixer upper" is based on the market. Planning to take a heloc to pay off the student loans is not necessarily a workable idea."
thanks. The market here is extremely stable, so I wouldn’t expect for the house to gain equity through fixes (although it probably would). The equity would come through buying a cheap house and paying it off cheaper. The logic is that fixers are cheaper and thus easier to pay off. If I sell it later, It will be worth the same or a little more than I paid for it. I’m not expecting to make a profit on the house, just pay it down and then use what I’ve paid off as equity. The market won’t go up, but it also won’t go down either. (most likely)
"Have you talked to a banker to determine if there is a different type of loan that you could use"
I haven’t. I should do that although I’m doubtful. That’s a lot of money and I can’t imagine having that much borrowing power. Hmm…maybe, I’ll look into it. I don’t have many assets outside of the home equity.
"This provides you cash to pay off student loan faster and allows for interest deduction for longer period of time"
So take out a second mortgage to pay off the student loans? I’m actually not sure that the interest will be high enough to be tax deductible. The houses we would buy are less than 100K, so the payments would be very low.
Monday, 13. September 2010
My math skills aren’t amazing and I’m not sure how I would figure this out anyway, so maybe someone can help me. This is a real life question. We have about 60 or so thousand dollars in private student loans and then maybe 10 in federal loans. If you’re not familiar with private student loans, skip to the bottom and I’ll explain them. The rate for the student loans is currently about 9%.
We are selling our house and if we sell the house for the amount that we paid (we’ll probably get a little more), we will net about 35,000 after commissions. We’re planning on buying a small fixer upper for 75-100,000 and getting a 10 year mortgage. Mortgage rates look like they’re about 4 or so percent. I was planning on getting the 10 yr mortgage, paying it off in about 4 years and then taking out a home equity loan and paying them off. My dad said that I should either put down less and pay down the student loans even though it doesn’t pay them off or take out equity as I go and pay them down.
My hesitation to do this is that my payment on the student loans won’t go down just because I owe less, but with a HEL, I will be paying more for the time being (mtg + HEL+ student loans at the same time). It’s still doable, but I’d rather not be paying more than I have to.
So my question is this:
if I pay down as I go, will my student loans skip ahead so that I’m paying a higher percentage of my payment to the principle than interest? Or is the percentage of principle vs. interest determined by time rather than how much you owe?
What do you think the best strategy for paying off these loans quickly and for the least amount of money?
*************************************
Private student loans: they were offered for a short time while lenders were lending money like crazy and they’re not federal loans, so they don’t have the low interest rates. The interest rates on private student loans are variable, currently at about 9%, but it’s been as high as 11.5%. No one is offering them anymore so you can’t refinance them, lock in a rate, file for bankruptcy, or in any way alter the loan terms. No matter what, the loans will be at that rate and you can’t get rid of them. If our credit scores go down or we don’t pay on time or whatever, the rates can go up to whatever they want. So as you can imagine we are dying to pay these off and get them out of our lives.
Thursday, 9. September 2010
I graduated law school in May, took the July CA bar, and passed. I’m now working at a small firm as an associate. I know I make a low wage (/hour), but I am getting hands-on file responsibility. I hope to find a job at a mid-size firm next year, once I have some experience.
I owe about 55K in federal consolidated loans, interest rate is 4.5%. My mom paid off my private loans totaling 0K using her home equity line (it has a lower interest and she can deduct the interest), and I pay the home equity line for her. Recently, she also used 30K to pay off credit card debt my dad borrowed in my name (and I receive a check from him every month to reimburse me).
I have no savings or an investment or retirement account. My firm doesn’t offer benefits.
Should I concentrate on paying off these loans first? Should I pay just the minimum, slightly more, or aggressively pay as much as I can? Invest? Both? I get mixed answers, but I want advice from people who have actually gone through this.
Friday, 30. July 2010
My dad has stated that he is interested in assisting me with a down payment for my first home. I look at this as an investment for him while helping me and assume that once I pull equity out of the property I can repay him plus interest. What is a reasonable interest amount for my father?
Tuesday, 27. July 2010
Here’s the thing, I’m getting ready to turn 21 in a month and I’ve only got less than 1 year or credit history. My dad wants me to "buy" our family house (which we just finished building) so that we don’t loose the house (they can’t afford it as of now). He says that he knows someone that can get me the loan (for 500 freaking K) and that they (my parents) will be paying all the bills.
I am getting married in spring 09 and my dad is going on disability in a few months. this house is sitting on an acre lot, he wants to have the house on my name for a while until it builds up some equity (that’s gonna be hard since we are in Sacramento, CA right near the epicenter of the housing collapse) and then split the land using the equity money and build another house that will also be in my name and then only God knows what he will want to do afterwords!
I don’t want to forsake my family and not go through with it but holly crap this is extremely risky and possibly illegal. If I can get the loan and my parents are not able to pay it then my wife(to be) and I are royally F#@&#D sideways in the **** but if all goes well then we wont make much off of anything since my dad is gonna want compensation along with a new car and anything we owe the bank(s).
so, what do ya say? should I go full steam ahead or graciously bow out?
Thanks for all answers!!!
God Bless =)
Monday, 26. July 2010
I need some help. My dad and brother live in illinois (lake county) and the house is under my brothers name now and he took a equity line out and hasnt paid on it and wants the bank to reposes it. My dad has no wear to go but wants the house. My brother cant and wont pay the loan and my dad doesnt have the money to pay the loan, is there any way of getting the house out of my brothers name and into my dads and him then being responsible for the loan and what is owed. My brother wants it all out of his name or he says they can just take it. Help please