2 mortgages, remodeling, need more cash

17 years ago

Hello,

We are in the midst of remodeling and need about 30,000 more. House value is about 430,000. First mortgage is 47,000 (15 yr @6.25 - 7 yrs. remaining) Second mortgage which we took out in Feb. is 120,000 (15 yr @6.25) We thought we took enough out in Feb., even allowed ourselves a 20,000 cushion, but surprise! - all new a/c and ductwork ate that up.

I would appreciate any advice on what we should do - consolidate? get a HEC line of credit for 80,000 and pay of the first mortgage? (which my lender suggested)

This experience has beome overwhelming! Ignorant and naive, we decided to live in the house while the work was being done. (to save money) Now in addition to living in insane conditions, we are stressed about running out of dough!

Thanks in advance for any financial advice - my brain hurts from decision making! Sincerely, Jenny

Sort by:Oldest

Comments (5)

blake2502
17 years ago
Oh my gosh, I could have written your post. I am in the exact same situation! I also need about $30k more and have so regretted trying to live in my house during renovation. Ugh, it's awful!!
Have been looking at the ideas of:
a) new home equity loan or line of credit
b) putting last bit on credit card with the hope of paying off in a year
c) taking private loan for $30k
I think the new home loan is wisest, despite cost to refinance, due to tax deductions. Would appreciate any thoughts on this too!
mariend
17 years ago
STOP, evulate what your debts are, go to a Bank or Credit Company, not mortgage co, and discuss this with them. You really do not want a 3rd loan. Just take the information home, discuss it, and take a deep breath and look where you can cut back. Go to the library and look for books/magazines on money, Like the gal who has information on TV about saving money. We have been there and and wish we too had cut back instead of just borrowing more. Is there a financial counslour avaiable that can help? Even certain law firms have people avaiable. Ask questions, read articles, but don't start buying books. If you have high % credit cards, and have good credit, ask them to lower the rates, I did and they did lower it 4 points.
Related Discussions
help!!! advice needed asap for 2nd mortgage
Q
Comments (12)
It is really hard to decide; my rule of thumb has always been, which will require the least out of my pocket in the long run? Without doing all kinds of calculations (that I can't do, but I believe that there are websites that can calculate it for you) I can't say for sure. There are advantages to the fixed rate refi, especially lowering the interest rate on your original balance; but could you get a lower rate and less out of pocket from a HELOC, paying it off first with the same discipline that you have been using? Have you talked to a credit union? I did take out a HELOC from my local credit union in order to pay off my mom's condo loan; there were no closing costs, fees, etc and the lowest interest rate in town. That was before the crash -- and it was long ago paid off, so I don't know if such a good deal might still be available. Don't know what repairs you need, but some large companies (hvac, roofing, siding) will offer low cost financing too -- you have to read the contract very carefully to be sure that you are getting what was promised.
...See More
2nd mortgage question
Q
Comments (6)
I appreciate the reponses.... to basically address what Molly said, no I don't have a professional appraisal yet. I am basing it on market prices I've seen in my town. Currently besides one bank owned property the lowest house listed is at 395K. and the house next to me, which is small too, but differnet in a number of ways just sold for 380. I guess my point is I know I'm below these by some but I'm really at the floor of my area so I don't think my values are too far off. As far as the 450-550, right now i'm a 2/1 and would change to a 4/3. Pretty much all the decent looking 3-4 br colonials in the area are 500-700 listing. Assuming things are moving at all, I would think I'd at least get 450K as a final appraisal. Just as an FYI after buying the house, we did put 40K into remodeling the kitchen, current bath and rewiring/replumbing the house. This has helped "increase" the value somewhat. At the height I would have expected $410-$425 for my house. I don't like the idea of the expendature now either, however there is a reason. As of now as a 2br/1bath, if we do have kids, it will be tight. However the driving force as to why do it now, is that our roof is failing. It requires a complete rip off and replace of 2 layers of asphalt and one of ceder and completely plywooding the roof. Cost to do it from 2 companies so far os $11-12K. So the thought is it will cost 10%-15% of the cost to do the dormer to do the roof. We've been talking about doing the dormer since we bought the place. Lets just do it. Right now I feel we're undervalued for the size due to the number of bedrooms. 2/1s are not popular, and we're actually decent sized and a great layout, but it is holding the value of the home back which is why I feel that we can recoop most of the construction costs if we sell. I would just insulate and do the roof and trade up in a year or 3, but closing costs are terribly expensive on Long Island. My closing costs to purchase were 15K, throw on another 15K-20K for the RE to sell this one, and we're 1/3 of the way to putting a topper on mine. We still may just do the roof, I just want to know my options.
...See More
someone wants to buy my house cash/we still have mortgage
Q
Comments (16)
Most RE attorneys will not facilitate a "Subject To" closing, because they feel like they are helping to facilitate a civil crime. The current mortgage has a Due On Sale Clause which means that if the deed is transferred, the current mortgage must be paid in full. This clause was added in the 80's when interest rates skyrocketed and people found it beneficial to take a note subject to, at the current interest rate, as opposed to getting a new loan at the current, high interest rate. I know an investor that does Subject To deals all the time, and the lenders have never called the note due. But there is always that chance. He only is in posession of the home for a very short time, as he immediately rehabs and sells them. Unlike you would be. Another thing to think about... what is going to happen when you go to buy your next home and the lender finds that you have another mortgage? You will probably not qualify. And if you do, it might be considered a second home, which raises other issues. I personally would not do it... too much risk. If you do go through with it, set up a banking account in your name where the drsfts for the mortgage payments will be coming from, so the bank does not see the change. You will also have to figure out how to fool the banks as far as the insurance policy changing names, but the house was never sold. This is a major way that the bank will know that the home has changed hands. As you can see, even if no one has ever been prosecuted for doing this kind of thing, it is shady at best.
...See More
Our buyers need more time to get a mortgage committment
Q
Comments (54)
I merely mistyped on first posting you quoted, Summers. Complete accident ( I was probably interrupted and failed to read back). I use a broker to LIST only (so to sell, not buy). I do buy direct, and my second post is accurate. My listings are indeed short. Again, why obligate myself to someone for a long period of time, and of course, if we are in a transaction when the listing ends or if the broker was the procuring cause, I am on the hook anyway. So there is no reason to enter long listings or equivalently, enter long relationships with Buyer brokers. You can always renew. That was the point of that post in which you caught my inadvertent use of the wrong word. My error, and I can see how that caused confusion. I apologize for stating the word "buying" when I meant "listing". I have one user name only, by the way. That said, I stand by what I said in this post regarding the strange delays. And I do hope it works out for this poster.
...See More
joyfulguy
17 years ago
If you know of a Credit Union somewhere in your area, they are often very helpful in regard to various money management issues, including mortgages.

A credit union is like a bank owned by its users, sort of a peoples' "bank" - but legislation won't allow them to use that term.

ole joyful
chelone
17 years ago
We moved into our home when it was framed, plumbed, wired, sheetrocked. I well remember the chaos that you now see all around you. We shovelled in dinner, and we worked until 9PM, after a full day for pay. Days off and "vacations" found us hard at work on our love nest... doing the projects that required more than a few hours each night. It was hard work. (still is!)

I remember how excited I was when I FINALLY finished priming and sanding the walls and could finally put the color on them I wanted. Then, how exciting it was to see the plywood subfloor painted... and the window and door casing and the mopboards... (I painted all that, too).

I don't have any financial advice to offer. When we needed more money we got another job or picked up another shift. Or we saved for what we wanted to do. Or we cut back somewhere else. Maybe you could find a way to save some dough with "sweat equity"... or maybe that's not your "cup of tea". People thought we were NUTS to live the way we did. But we now enjoy 100% equity and the inconvenience seems trivial in hindsight.

Anyway, I understand how hard it is to live in a construction zone... I did it for 4-5 years and we still aren't done, although the major inconvenience is long since gone. Hang in there.
GoJennyGo
Original Author
17 years ago
Thank you all for responding! It is comforting to read others words of wisdom, especially from those who have experienced remodeling themselves. I do not intend to take a 3rd loan, but we do need to come up with more cash to finish what was started. We are just kicking ourselves for not taking more in February at the beginning!
Thanks again, and since we haven't decided anything yet, please keep any advice coming!!!
Jenny

2 mortgages, remodeling, need more cash

Comments (5)

blake2502

mariend

Related Discussions

joyfulguy

chelone

GoJennyGo
Original Author

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

2 mortgages, remodeling, need more cash

Comments (5)

blake2502

mariend

Related Discussions

joyfulguy

chelone

GoJennyGoOriginal Author

COMPANY

BUSINESS SERVICES

GET HELP

CONNECT WITH US

GoJennyGo
Original Author