2nd Mortage, CC Debt - Confused-What to do? Suggestions?
Sorry - this is long...
I & my "significant other" (aka "hubby") bot house end Sept '03 for $134,000. (1st time homebuyer for me - hubby has bot houses in past). We had to do 80/20 loans, as closing costs, inspections, etc. cost us about $10,000, and I didn't want to completely deplete my "safety net" savings.
We got fist mtg for $107,000 @ (either 5-5/8 or 6-5/8% - not sure now - I think it's 5-5/8), and 2nd for $27.000 @ 8%. BOTH ARE FIXED RATES.
5 yr Prepay penalty on first, 3 yr prepay penalty on 2nd.
There wasn't supposed to be any prepay penalties - but, there they were on the docs when we signed! Since time was of essesnce back then (and after me complaining - haha), I realized that it really didn't matter - since we knew we couldn't pay either of these off in those timeframes anyway - unless we hit the lotto. So, I let it go.
Hubby has hardly anything worth mentioning owed on a credit card - not a problem.
I have 3 cc's with high balances: (balances/min dues are approximates):
1) $1900.00 @4.9 % (for a few more months - limited time) - Min due $30.00 - always pay $100.00/month. (plan to trf this to lower - or zero - APR offer before rates go up)
2) $1530.00 @ 4.99 % ('till paid in full - as long as I don't default) - min due $24.00 = always pay $100.00/month.
3) $4230.00 @ 3.99 $ ('till paid in full - as long as I don't default) - min due $62.00 - always pay $100.00/month.
Hubby has been paying house pymt., his phone, internet, his cc, and his other misc work related. I pay my cc's, utilities, my phone, basic cable - (our only form of entertainment - other than the internet! haha - we do not go out). We share in cost of food/personal supplies, etc. We never go to stores for clothes and junk.
Here's the deal: Our 2nd mtg is a 30 yr loan, due in 15 yrs. Our "first year anniversary", we made double pymt on 1st & second. (Also, hubby was making small additional pymts to 1st and 2nd loans for a short while).
2nd anniversary year, we didn't have $$ to make that "13th pymt" (plumbings problem, etc...thus some of the CC debt of mine.)
"I" thot it made better sense to apply all extra pymts to the 2nd only. So, he has been doing that. Pymt on 2nd is just about $200/mo. He was paying $250 - then $300/month last several months towards 2nd. I think our balance is around $22,000 on second now.
We're ending our 3rd year.
Our prepay penalty on the 2nd expires end Sept. this year.
We have to be careful to not pay TOO much extra before our "anniversary date", else we will be penalized.
I want the 2nd paid off ASAP! I am willing to put a small chunk of money ($1200.00 or more) towards the 2nd after our prepay date expires.
On the other hand, I have those dang cc balances.
My $1200 or more won't pay off anything, but will put a small dent in something.
I really don't know which way to go. The 2nd is @ 8%. My outstanding CC's are at lower %'s.
We aren't "spring chickens" anymore. I'm on SSDI, and hubby has some health problems too. I only get about $1000/mo. Hubby is self employed, so his income varies.
Having the 2nd paid off would lower our house pymt by $200/mo. - Even with that, I don't know if either of us could survive, keep the house, if something happened to one of us. (Unless we got a roommate - and it still probably wouldn't cover all)
(I'm not even worried about the 1st mtg right now)
WE PLAN TO STAY IN THIS HOUSE FOR A LONG TIME - MORE THAN 7 YEARS.
I refuse to re-fi or take out ARM's.
I don't know which way to go come Oct. this year:
Slam down min of $1200 towards 2nd all at once, slam the $1200 on a CC, or just continue the cc's, and pay x-tra $100/mo towards 2nd (more if able) - on top of what hubby makes???
I like to keep my "safety net" savings (which are currently in 90 day cd's) for emergencies.
As far as taxes go, I don't get enough $$ to file. I'm below poverty!haha! Hubby gets all the tax writeoffs.
Sorry this is so long - but thot I needed to supply as much info as possible to come to conclusion.
What opinions, if any, and WHY?
Thx so much in advance!