Thank you so much; that was very helpful and clear. This is all so new to us as we have always had great credit. But my husband is in a very specialized field, and at age 58, may or may not ever get another full-time job. Hopefully some freelance work, at least.
Yes, we do have a mortgage; sorry I didn't mention that. My paycheck is now going to have to stretch to cover everything -- there are so many expenses, including much more expensive health insurance through my company -- and that's not going to be possible for very long if my husband doesn't find work. Do you think it's a good idea to take out the 18-month no-interest money from my bank, just to have a couple thousand dollars on hand in case our credit crashes and we can no longer get these loan offers? It will cost 3%, but the interest if you don't pay it off in time is not too high (12%) and only charged on what you don't pay off.
Thanks very much,
Thanks, XXXXX XXXXX out we can't get Obamacare because I have an "affordable" option through my employer. (Though it's $400 a month more than we were paying and very high deductible).
But since you asked, I do have a couple of follow-up questions.
First, if my husband is unable to find work for an extended time, would it be wiser to tap into our 401K or take out a home-equity loan? I hate the thought of either option! We owe about $160,000 on our home, which has an appraised value of $325,000.
Also, we haven't had any late payments -- YET -- but it's almost sure to happen and hurt our credit. Right now, we have an offer of up to $6,000 at 2.99% interest for 24 months with no balance-transfer fee (goes to 12% on any remaining bal), through my husband's credit union. We have the following balances: $3,000 on one Visa at 10.24%; $3,522 on another Visa at 10.99%; $2,000 on a line of credit at 11.4%; $600 on a Citicard at 0% (goes to 12% on any remaining bal). (We also have $3,000 in medical bills that we're paying off.) If we take out money on the 2.99%/24-month deal, it doesn't seem like it would lower our monthly payments that much, but it would give us longer before higher interest kicked in.
Any suggestions you have would be very welcome!
Wow, this is extremely helpful. One of our Visa cards and a line-of-credit are through the credit union, so now I will look closely into the collateral issue.
Thanks so much for your help.
I have a question about bankruptcy. You mentioned that only $125,000 worth of equity in a home can be protected during bankruptcy. What if you take out a home-equity loan before filing for bankruptcy that leaves you with less than $125,000 in equity? Would the equity for bankruptcy purposes be based on market/appraised value, or for the actual equity remaining after the home equity loan sucks up some of the equity? So if the house is worth $300,000 and you owe $150,000 on your mortgage, that would leave $150,000 in equity -- so they'd sell your house for the $25,000 you couldn't protect. But what if you also had a home-equity loan for more than $25,000?
I hope this makes sense! Thanks!
Hi again, Beth.Q: What if you take out a home-equity loan before filing for bankruptcy that leaves you with less than $125,000 in equity?A: Then all of the equity would be exempt (i.e., protected) because it is less than $125,000.Q: Would the equity for bankruptcy purposes be based on market/appraised value, or for the actual equity remaining after the home equity loan sucks up some of the equity?A: The equity consists of the fair market value of the property, less the secured debts. So, you would subtract any mortgages, liens, home equity loans, etc., from the fair market value, and what remains is the equity. If what remains is less than $125,000, then it can all be exempt (i.e., protected).Q: So if the house is worth $300,000 and you owe $150,000 on your mortgage, that would leave $150,000 in equity -- so they'd sell your house for the $25,000 you couldn't protect. But what if you also had a home-equity loan for more than $25,000?A: If you owe $150,000 on a mortgage, $25,000 on a home equity loan, and the property is worth $300,000, then that means you have $125,000 in equity. In that scenario, it would all be exempt.Does that answer your question?
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