Just had baby, bills are out of control & we forecast 3 mo. before needing credit cards to pay mortgage- help!?
We are married and have three children… (just had our third child.) The pregnancy had many unforeseen problems which resulted in a mountain of doctors bills during and after the pregnancy. We have a substantial amount run up on credit cards (over 20k) and that promotion we have been holding out for my husband to get for the last two years is nowhere to be seen now. My mortgage is way more than we can afford right now. We purchased our home 4 years ago on a 5 to 1 arm. Got scared when rates started to go up and wanting to do what we thought was the right thing, we refinanced to a traditional 30 year loan two years ago which raised our monthly payments about $800. The rate we are locked in at is 6.5% and we had perfect credit back then! With everything that has happened and what we are forecasting, we can swing things another maybe 3 months before needing what little we have left open on credit cards to pay our mortgage. We have used our credit cards over the last two years to purchase groceries and what not when we didn’t have the cash. I just don’t know what to do. We live in las vegas- and our home has depreciated so much we are estimating to be upside down around $150-175k on top of losing the $70k we put down on the house. Please, where do we go for help. I don’t know where to start or who to trust! What do I do?
Sounds like you need a personal bail-out…here is how:
You need to be selective with the bills you pay. Basically, stop paying all unsecured debts. All credit cards fall into this category. If you have available credit left, use it but do not do something stupid like go on a bahamas vacation or buy a flat screen TV.
Hopefully you have a sub-prime mortgage, or your mortgage was resold on the secondary market. If that is the case, stop paying your mortgage and find a good bankruptcy lawyer in your area. You can stall the foreclosure process 6-12 months or more by disputing the foreclosure action (since the bank does not own your loan anymore, in most states it is illegal for them to foreclose) and live in your home for free. There is a new bill in the works that will allow bankruptcy court to adjust the mortgage balance to market value as well as lower your interest rate. If you can afford the lower payments, you can keep your home after filing chapter 7. If not you’ll have to move out.
Right now you need to stop worrying about pointless things like your credit score and focus on your family. You still have income; once you stop paying “optional” expenses and only pay for utilities, groceries and such, you should be able to adjust.
BERNANKE STANDS READY TO DEVALUE YOUR DOLLARS, what part of this do you not understand?
WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke heads to Congress Wednesday with a message of reassurance: The Fed stands ready to take new steps to bolster the recovery if the economy worsens.
The Fed chief kicks off back-to-back appearances on Capitol Hill at a delicate time for the economy. The recovery, which had been flashing signs of strengthening earlier this year, is losing momentum. And fears are growing that it could stall.
Consumer have cut spending. Businesses, uncertain about the strength of their own sales or the economic recovery, are sitting on cash, reluctant to beef up hiring and expand operations. A stalled housing market, near double-digit unemployment and an edgy Wall Street shaken by Europe’s debt crisis are other factors playing into the economic slowdown.
Bernanke, who is scheduled to deliver his twice-a-year economic report to the Senate Banking Committee on Wednesday afternoon, will probably again downplay the odds that the economy will slide back into a “double dip” recession. But at the same time, he’ll strike a more cautious tone, pointing out that the fragile economy is still vulnerable to shocks.
To strengthen the economy, the Fed is likely to hold a key bank lending rate at a record low near zero well into 2011, or possibly into 2012, economists predict. That would mean rates on certain credit cards, home equity loans, some adjustable-rate mortgages and other consumer loans would stay at their lowest point in decades.
Ultra-low lending rates, however, haven’t done much lately to rev up the economy. Consumers and businesses are cautious and aren’t showing an appetite to spend as lavishly as they usually do in the early stages of economic recoveries.
Even though the prospects of deflation — a widespread and prolonged drop in prices for goods, the value of stocks and homes and in wages — is remote, some Fed officials are worried about it. Keeping rates low would help prevent deflationary forces from taking hold.
Against such a backdrop, Fed officials at their June meeting cut their forecasts for growth this year. They also saw the need to explore new options for energizing the rebound. That’s a turnaround from earlier this year when they were moving to wind down crisis-era supports.
If the recovery were to deteriorate, the Fed could revive programs to buy mortgage securities or government debt. It could lower the interest rate paid to banks on money left at the Fed or cut the rate banks pay for emergency Fed loans. The Fed also could create a new program to spark more lending to businesses and consumers in a bid to lure them to ratchet up spending and grow the economy.
The economic hurdles to taking such steps would be high, analysts say. There’s also unease within the Fed about taking additional stimulative steps because of fear they could spur inflation or speculative excesses by investors later on.
Bernanke will be under more pressure than usual because it’s an election year. Upset by high unemployment, rising foreclosures and lackluster wage gains, voters may seek to punish incumbent Democrats and Republicans in Congress if the economy doesn’t get better. The unemployment rate, now at 9.5 percent, is expected to stay high — in the 9 percent range — through the end of this year, under the Fed’s forecast.
Despite the wobbly recovery, there’s little appetite in Congress to enact a major new stimulus package. Senate Republicans in particular have balked at spending more when the government is already saddled with record high budget deficits.
Bernanke appears before the House Financial Services Committee on Thursday.
When Bernanke delivered his economic report to Congress in February, he struck a confident note that the rebound would endure. But he warned it would not be robust enough to quickly lower unemployment. At the same time, he was laying the groundwork for the Fed to start boosting rates once the recovery was firmly entrenched.
Now, given rising threats to the rebound, prospects of a rate increase this year have disappeared, and the Fed is more focused on keeping the recovery alive
ANYTHING to prop up HIS FAKE RECOVERY ! SCREW THE SAVERS and responsible ,lets help the wall street gamblers get easier access to dollars !
The predictions of massive inflation about to start immediately have been coming for a couple of years now. I’m sure someday inflation will happen.
I side with the recovery no matter how long it takes.
Answers is not a blog site.
Mortgage forecasting software?
I have had my mortgage for approximately 2 years & im looking at paying a little extra towards it on top of my current payments, in the hope of reducing my interest & increasing equity over the long term.. Can you recommend any forecasting software of which I can factor in the amount I have borrowed, how much I currently pay, how much I wish to overpay, what duration & what saving’s in interest I would make (Final result) at the current, fixed rate of interest. Basically a brilliant financial tool that would allow me to do all this, with ease.
There you go…this one is really good! Just fill in your details in place of the pre loaded amounts.
Should I wait on buying a vacation home?
I was thinking of buying a winter home in Florida when I retire in may. I dint have a whole lot of money and would need a good interest rate to pull it off. I would also be relying on the mortgage interest writeoff
Are these two things that I should not rely on in the next year? Are dems trying to limit mortgage interest tax deductions Are interest rates rising??
What is in the forecast??
Don’t. You cannot rely on the deductions for second home to remain. When Clinton took office he attempted to eliminate them
Should we consolodate with a lower interest rate?
Firstly, I live in Ontario Canada, so this deals with the Canadian Banking system.
My husband and I currently have a Line of Credit worth $25,000 at 4.55% interest. We have a closed mortgage worth $165,000 with a term of 5 years @ 5.3% interest and an ammortization period of 25 years (we are doing accelerated weekly payments, so our mortgage can be paid off sooner).
Our mortgage does not come up for renewal until June 2011. It is forecasted that interest rates are going to start climbing again, likely beginning this summer…They won’t climb quickly, but will start to again.
At this time, we are aggressively paying down our line of credit and we expect to have it down to $10,000 by the time our mortgage is up for renewal next year.
We were talking to an Account Manager last night, and what they recommended was that we take our line of credit, put it on our mortgage, switch to a Variable Rate mortgage for 5 years (so our rate would go down to prime, which is currently at 2.25%), and take the additional penalty of about $5,000 for ending the term early on the closed mortgage.
The way they explained it to us was that our mortgage payments would go up slightly, but we’d be paying off so much more interest, so the penalty would be worth it to take. If we took a Closed Variable Rate mortgage for 5 years, we’d pay whatever Bank of Canada Prime was. If we took an Open Variable Rate, we’d pay prime + .70%, but could easily get out of the term if we wanted to with no penalty.
We’re not sure what to do. Is it worth it to consolodate and put our line of credit on our mortgage + take the penalty? Or should we just continue chisling away at the line of credit, wait until our mortgage is up for renewal and then take a Variable rate mortgage (assuming Prime is still pretty low).
I hope I explained it all okay, thanks for the advice in advance.
If I understand correctly, you’re about 4 years into a 30 year mortgage. Several points come to mind.
The first is that the only way to make a good judgment is to take ALL the costs with switching mortgages, ie the penalty for closing the first mortgage as well as all the costs for the new mortgage, which will be in the range of 3-5K, make some guesses as far as interest rates and see how the costs compare.
You don’t say what your current mortgage could go to, ie +2% every 5 years, etc; this will have a bearing.
If you do make a switch, why aren’t you considering a 15 yr mortgage? Your payments go up by 15-20%, but you pay off the mortgage in half the time.
In the same vein, while paying of your line of credit is good, your mortgage is at a higher rate, I would put most of the extra money toward it. Print out an amortization schedule and look at where you are on the mortgage and see how many months you can knock off the mortgage by prepaying on it. (Look at the principal column, so for every $ extra, it makes a big difference as at that point in your mortgage, for every $1K regular payment, $100-150 is going to principal. So if you dump in $1K extra, you just shortened the mortgage by 8-10 months.
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