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PDtax
PDtax , CPA, MBA
Category: Finance
Satisfied Customers: 3906
Experience:  Tax professional and business consultant for 35 years.
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I would like to talk with you about my options for obtaining

Resolved Question:

I would like to talk with you about my options for obtaining a loan to be able to pay off my debt.  I dont know much about home equity loan options. I am about 1 paycheck away from not being able to maintain  the debt I've accrued. 

It is my hope to add a loan to my mortgage in an effort to pay off $55,000 in other debts and increase the mortgage payment at a good interest rate.

Right now, the monthly payments on those debts equal about $1700. I can only afford to pay $1000 of those bills each month. I can feasibly add $1000 to my mortgage payment.  I don't want to, but I can in order to decrease my outgoing monthly payments .

As I said before, I don't know much about re-fi, home equity loans, etc. But I truly need to explore my options before I get to the point of only paying some of the bills and allowing others to go to collections.

Can you offer some suggestions and help me understand any options I may have for me, if any?
Submitted: 2 years ago.
Category: Finance
Expert:  PDtax replied 2 years ago.

PDtax :

Welcome to the site. I'm PDtax, and will be helping you today.

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Expert:  PDtax replied 2 years ago.
These are tough times for many, and your situation is not unique, but there are solutions.

I will respond by assuming you have enough equity and credit rating to obtain second mortgage money to repay all that debt in full.

A new first mortgage might be an option, if your relationship with your lender is good (and local). You can save on some of the fees and have the potential for a longer term repayment.

It seems easiest to see if a second mortgage for $50,000 at today's rates can be serviced for the $1,000 per month you say you can afford. I think it can.

The monthly mortgage payment on a $50,000 debt for fifteen years (second mortgages are often termed at less than the US standard 30 year mortgage term) is less than $400 per month for 15 years at 5%. Add some homeowners insurance to cover the additional loan, and you are still well under the $1,000 you can afford.

I would be remiss if I did not suggest that a complete review by a financial professional might be in order. The debt is substantial, but you will be paying ot off for many years. There are other options, such as negotiating with your creditors for reduced settlement, or even bankruptcy as options for cleaning up the debt. A financial professional can advise you on the pros and cons of each option, so your choice will be the best for you at your stage in life.

Thanks for asking at Just Answer. I'm PDtax.
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