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Should I take out second mortgage to pay for credit card?

Posted on: 29th May, 2006 05:11 am
Due to being out of work for illness and other factors, I got behind on my mortgage. Fortunately the loan company worked with me and we did a loan remodification. Now I am being garnished for a credit card and am afraid I won't be able to make my payments for about 5 months. Should I try to take out a 2nd mortgage to carry me and then use what is left to pay back on the 2nd mortgage? I will be in good shape again in 5 months but don't want to lose my home and have no where to get and finances.
Hi, Critterz

The idea seems to be ok with me but all I want to suggest is look for your all the possible options before going into it.
Posted on: 29th May, 2006 05:52 am
you need to be very careful this time if you opt for 2nd mortgage then again you have to bear lots of extra costs like higher interest rates and high second mortgage fees - though it will depend upon how much you need and for how long.

as mac said, that you need to be spot on with your decision this time.

all the best.

adonis
Posted on: 29th May, 2006 06:00 am
hi critterz,

welcome to mortgagefit forums.

generally i don't advise people to take out a secured loan in order to pay off an unsecured loan as long as you can manage the money from somewhere else or from your savings or by restricting your expenses.

since you mentioned that you are unable to manage any more finances at present so, you may opt for a home equity loan or 2nd mortgage to pay off your credit card debt. the interest on a home equity loan will be more than your first mortgage but at least it will be lower than your credit card rates and it is usually tax deductible.

but at the same time you should keep it in mind that taking a home equity loan or a second mortgage to pay off your credit card debts can be an effective repayment method only if it can be handled with discipline.

you must have a clear view on how to repay your mortgages as otherwise you will have the risk of losing your home in case of default. so, plan your budget and talk to a good broker before you opt for the loan. if you can manage it with some strict budget then happier times will be knocking soon at your door.

feel free to ask if you have any more queries.

god bless you.

for mortgagefit,
samantha
Posted on: 29th May, 2006 10:10 am
I am not very good at maintaining my credit cards & now have 9 cards with around $50,000 balance on them with rates that range from 12 to 18%. Few days back I got a offer for a $55,000 second mortgage which would be at 16% for a period of 30 yrs. to be used for consolidating these credit card debts. I was thinking that it would result in considerably reducing the monthly payments, I like to have all the opinion I can get on whether it will be a right choice to make or not.
Posted on: 22nd May, 2007 07:33 pm
Hi Jewison,

There are pros and cons of taking out a second loan to pay down credit card debts. It is advantageous to pay off the loans which have interest rates higher than that of the second mortgage. But on the other hand, paying off debts having rates lower than 16% will be a loss on your part. Anyway, it is still a wise thing to pay off high interest debts first.

You will find a similar query at a previous discussion on Paying off Credit Card debt with Second Mortgage .

Hope that will help you.

Thanks
Posted on: 23rd May, 2007 05:14 am
As per the details you have provided, rate on some cards is lower than what rate you would be getting on this second mortgage. I would say make it partial and leave out the cards which have lower rates compared to the rate you will have for the second mortgage.

Another point to note is that if you have plans of shifting to some other city in the near future to get a better job. If the second mortgage would result in total debt on the house to exceed its current value then if you were to sell, you will have to bring cash to pay off both the loans. For example, if total debt amounts to $200,000 & value of the house at the time you plan to shift come out to $160,000 then you will have to pay the balance amount from pocket.

Miller<a
Posted on: 23rd May, 2007 04:07 pm
I am thinking about a refinance. I owe 85000 on my present fixed mortgage and I plan on getting married soon. I want to pay off both our credit card debts of about 4,000 and have money for reception and honeymoon. I have put about 20,000 in improvements to the home and am hoping that house will appraise for over 105,000 so I can take out money for what we need. If home does not appraise for that amount what other options do I have? I want to be married before end of March. doubleD
Posted on: 21st Jan, 2008 08:58 pm
It may be difficult for you to qualify for a second mortgage if you have already fallen behind on payments but I think it could be a good idea if it saves you money so that you don't ruin your credit or lose the house.
Posted on: 21st Jan, 2008 10:09 pm
Hi Double D,

Welcome to the forum.

Do you have any idea as to what's the market in your area? That is, how are homes selling in your neighborhood and where do you stay actually?

You will get an idea of your home price from the recent home sales in your neighborhood. So, you would roughly get an idea as to what can be your appraised home value.

I think you can start off with getting pre-qualifed with a few lenders and that will give you an idea as to how much of a loan you can probably get.

Feel free to ask if you have further queries.

With best wishes for your marriage

May god bless you

Samantha
Posted on: 21st Jan, 2008 11:47 pm
Double D,

It sounds like you are already strapped. Why throw more debt, on top of debt? It's not the most exciting idea, but try to work your way out modestly, paying off the high interest credit cards first. And hey, maybe you just elope, instead of having a big expensive wedding. Good luck in whatever you decide.
Posted on: 07th Aug, 2008 07:38 pm
Taking out a second mortgage is very . . . almost extremely tempting. But it should absolutely be your last option because once you start digging yourself into your debt-hole, it's easier to just sink deeper and deeper. There has to be a point where you stop.

This article is very helpful in explaining the dangers in taking out a second mortgage:
"http://gabwith.us/why-getting-a-second-mortgage-is-a-bad-idea/"

I suggest you consult a financial adviser or someone who can help you in your tough financial situation and keep you out of getting deeper into debt

Good luck.

[Link deactivated as per the forum rules]
Posted on: 22nd Aug, 2008 09:49 pm
About how much would my 2nd mortgage be a month if I take out one for 30,000? I have credit dard debt in that amount that im struggling to keep up with, Im getting nailed with late fees. I was also unsure if I still qualify for a loan or is my credit score going to prohibit me from qualifing for a loan?
Posted on: 09th Oct, 2008 04:04 pm
Hi

You can use the following calculator for calculating the payments:

http://www.mortgagefit.com/calculators/howmuch-pay.html

Thanks,

Jerry
Posted on: 10th Oct, 2008 04:37 am
DoubleD never borrow on your home for marriage think about this for a min love is Grand Divorse is 2 Grand
Posted on: 24th Oct, 2008 07:08 am
In general, it should always be a last resort to borrow on your home. However, if high interest credit card debit is eating you alive, then you have to do what you have to do. A second mortgage is certainly an option for anyone who can't pay of their credit card debt but has any semblance of equity in their home.
Posted on: 31st May, 2011 11:56 am
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