A friend of mine has some debt and her credit reports have a lot of charge offs. She also has some current debt that are not past due and would like to pay them all off, such as high credit card interest rate. Her credit score are under 600. Now the good thing she has a 400K home with only 30K left on her mortgage,and then it is free and clear. Where to go for the fastest and easiest of loans for someone with poor credit? Would the bank give her a second mortgage ? Or a home equity loan? She is looking to borrow 50K. She now is semi retired and makes only about 20K. Would ANY bank consider her for a loan of 50K? Where would be the best place for her to get such a large amount? The bank that already holds the mortgage, and if so would they come out to view the house or just look at the figures? Or another bank? Oh and one more thing what about debt consolidation loans? Easier to get and can this be done on line with noone coming to the home? Thanks Woofer
If she only makes $20,000 per year, how in the world does she expect to make the payments on a $50,000 loan? Just for fun, I plugged some numbers into one of the many on-line loan payment calculators. A $50k loan, at 6.8% interest (which is better than she'll get with her credit score) for a 30-year-term (which is very unusual for a second mortgage) has payments of $325/month. More realistically, at 9% (probably still too optimistic) for 15 years, the payments are over $500/month. For someone who is taking home $1,500/month and already has another mortgage payment, that doesn't sound like a good idea to me. It's probably not going to sound like a good idea to any reputable bank or mortgage company, either. Especially not in the current credit crunch. And what if she does find someone to loan her the money? Given her past history, it's likely that they will end up owning her house.
She is regrouping and will be getting more money every few months as she has lots of things up for auction. She also did not want a long loan. Just say a 36 month loan, as she feels that she will be able to pay the whole thing off when she gets money for her family things and jewelry etc.She also now has decided to rent a few rooms for the summer which will bring in another 2K a month. What she needs is money now , she does not want a long term loan.She wants to just get everything paid and start anew as she sees that some of her debtors are going to sue if she does not pay them off soon,and she definitely does not want a judgement. Even though she has over 300K equity in her home? I don't think so. She is just trying to keep the wolves away from her door and not get a judgement against her. SHe got into debt because of health issues, as before that she was on top of her game. Now that she is back on her feet and has her health and strength back she is gong to get rid of a lot of her things and when you put things up for auction you don't get paid for several months if not more like 6 months to a year. If you don't thinks she can geta legitimate loan with all her equity, then I guess I will have to lend her the money,as I am not making that much in stocks of cd's, and I KNOW I will get the money back no problem. I just would have preferred her to get a loan on her own. As for loans are there places that you can get them on line and not have them come to the home? Thanks Woofer
Your friend may want to look at a home equity line of credit (HELOC). She should speak to her bank, but ask upfront what credit scores they require. She may not qualify for a HELOC with her primary bank. For research, she could try LendingTree.com, to see if anyone will offer a HELOC.
Yes, I mean the bank that holds the first mortgage. I doubt she will qualify, but it is worth the conversation.
Odd though with all the equity she has in her home,isn't it? I mean how can you have a 400K conservatively speaking value owe less than 10% of value and not get a loan. Woofer.
The bank is going to look at her ability to repay. A short-term loan for that large an amount is going to have pretty hefty payments. They are going to look at her other bills, and see that she can't make those large payments on her current income. Honestly, I wouldn't be worried about her getting turned down. I'd be worried about her actually getting the loan from some shady company that is looking to acquire her property cheaply.
Well if she doesn't get a loan she will have a judgement and by a very SLEAZY CA. They have been known to come and take your vehicles in the middle of the night. I guess I will loan her the money as I have had a pretty good week. : ) Woofer
All loans come down to two factors; collateral and cashflow. Cashflow is more important, as this is the true measure of ability to support the debt service. Collateral is the back up to the cash flow, should the borrower not pay. In short, your friend cannot seem to support the required payments based upon posted income levels. Banks are regulated as to lending criteria, income ratios for debt service are highly important.
You know it is a done deal now. I have negotiated with the JDB ,have gotten her other debts taken care of, and now she will be able to start paying me back with the money she saved. Thankfully I had the money and we did not need 50K : ) Less than half of that, and all is well with the world. I am very happy that I was able to help,and when she is back on her feet, and she will be : ) then I will take the karma coming back to me. : ) : ) Thanks to all for the help. Woofer
I think it will be fine. I don't think of it as noble but I will say I have always been free with my money when I have it. Hey I'm going to a casino this weekend, maybe I'll be lucky ; ) Woofer
Woofer, that is awesome man. I just wanted to give you more kudos for this because it's a great thing that you did. I also was wondering if you needed another friend with money problems?
woofer that is being a friend you know you can usually count on 1 friend all your life your friend is blessed to have you as a friend.now having kissed up i have this little invesrment deal !!!!!!!!!!!!!lol
Thanks. My friend is a good person. As for another friend with money problems.... I have too many of them right now ; ) Woofer
Heehehehehehhe. As for an update. I have been paid back half of the money I loaned her, and by the middle of next month it seems I will have back the rest. The renting of rooms was a good idea, and we have been cleaning out the attic and there were some good antiques that will bring in more money. I am blessed that I have a friend that I knew would pay me back and I am blessed that I was able to do so. As I said before I feel money is only good when you can help someone, then KARMA comes into the situation and you do reap what you sow. BTW when I went to Foxwood's I won $5800 and came back with all of it. : ) Woofer
I don't think the bank will be approving any kind of credit to your friend, but who knows, she just might get approved. It's always educational to talk to the bank guys
Correct. The basic principle that people don't realize is that a mortgage is not a loan against your home, it's a loan against your INCOME. No matter what the property is worth, if you don't have the income to pay it back, you won't get a loan. That's why Ric Edelman, one of the top independent financial advisors in the country (according to Barron's) advises taking out a mortgage before you retire--and putting the money in conservative investments so that it's there when you need it. Read his article about 10 Reasons to carry a mortgage here.
