[kmartinez027]

Hi, I need some advice. I have about 52,000 worth of credit card and loan debt. I have a credit score of 680 which was 721. I am currently with a consumer credit counseling service which I have to pay 1200.00 a month for 4 years. Im having a hard time making that payment! My question is should I refiance my house and pay off all my debt so I can keep my credit from going under or should I continue with the ccc program. I need to pay these off and I don't want my credit ruined but at the same time I paid my house off in 2001 and glad not to have a mortgage payment. Someone please help! Kristie :confused:

[ScottGem]

Can you refinance for less than $1200/mth (should be able to with $52K of debt). I would seriously consider it. You can spread the amount over 10 years and reduce your payments significantly. But you have to discipline yourself NOT to use the cards or you will just build your debt back up.

[excon]

Hello k:

I absolutely would get a mortgage. Not only will your interest rate be significantly (and I mean SIGNIFICANTLY) less, it may now be tax deductible, whereas credit card interest isn't. The payment for $55K at 5.75% for 30 years is less than $350 a MONTH, and you can get a better interest rate than that. Additionally, you can knock off about 15 years worth of payments if you pay $500 per month. Plus you can save your credit, and you don't have to pay those "credit counselors" a dime!

Yup, for those reasons, I think you should use your equity.

excon

PS> ScottGem is right, cut those little suckers up!

[Fr_Chuck]

Well I guess the situation is , if you mortgage your home more and can't then make those payments you will lose your house.

If you cut up the cedit cards and never use them again, getting a home loan will work, but if you get a loan and pay off the credit cards then charge back up another 30,000 in credit cards over the next 3 ot 4 years, you will be a lot worst off. I have seen people lose everything including their home this way.

So can you learn to live on your income and budget, that is the issue.

[Home Retention Agency]

Hi, I need some advice. I have about 52,000 worth of credit card and loan debt. I have a credit score of 680 which was 721. I am currently with a consumer credit counseling service which I have to pay 1200.00 a month for 4 years. Im having a hard time making that payment! My question is should I refiance my house and pay off all my debt so I can keep my credit from going under or should I continue with the ccc program. I need to pay these off and I dont want my credit ruined but at the same time I paid my house off in 2001 and glad not to have a mortgage payment. Someone please help!! Kristie :confused:

Your credit score is going to continue to decline as long as you're on the credit counseling plan.

And, you're going to have a difficult time qualifying for a mortgage while you're on this plan.

Don't take my word for it, check with a mortgage company.

IF they'll give you a HELOC or 2nd in this environment, you'll likely be paying higher rates than you think... and higher fees. Look closely at the Good Faith Estimate they provide you with and you'll discover what it REALLY costs to get that loan. And, don't be surprised if those costs end up being significantly higher once you show up to close the loan.

A mentor of mine who's very old and very rich always says that trading unsecured credit for secured credit is a fool's game.

A lot of those fools are in foreclosure now... or headed there.

BTW, you can probably negotiate just as good a plan as the credit counseling agency has, if not better.

[excon]

A mentor of mine who's very old and very rich always says that trading unsecured credit for secured credit is a fool's game.

Hello again:

I was waiting for someone to make that argument. And, I can't argue against it either, because it's true. Indeed, if you take my advice, you'll be financing that bacon cheeseburger you charged the other day for 30 years. That’s not good. Yes, the interest rate will be lower, but you'll be paying it for longer – a lot longer. Plus, if you don't pay, there goes the house.

No, it's not the right thing to do. However, when you paint yourself into a corner, as the OP certainly has, the right thing to do isn't readily discernable.

IF she can bear up under the strain of either the budget forced upon her by the credit counselors or whether by herself, then THAT would be the wise course. Or not.

Plus, one also assumes that a $55K mortgage would fall well below a ratio of 50% loan to value. She would get a good rate with that much equity.

excon

[ScottGem]

The OP talked about a hard time making a $1200/mth payment. If that payment could be halved would they find it much easier?

Yes there is a definite risk in trading unsecured debt for secured debt. Yes its often foolish to do so. But if it's the difference between an unaffoirdable payment and an affordable one. I think its worth the risk.

[Home Retention Agency]

The OP talked about a hard time making a $1200/mth payment. If that payment could be halved would they find it much easier?

Yes there is a definite risk in trading unsecured debt for secured debt. Yes its often foolish to do so. But if its the difference between an unaffoirdable payment and an affordable one. I think its worth the risk.

The unspoken assumption here is that the debt will not be replaced.

That involves a significant amount of behavior modification.

Some of us are still working on that... most of us haven't made any changes at all.

KM may have hope, because the house is paid off.

OTOH, at least once a week I speak to someone who was GIVEN a house F&C, or they "had it paid off at one time," did this maneuver and now they're about to lose it.

I would still look and see if there's a chance to do a few balance transfers to get that rate down... those offers are still out there if you haven't "opted out."