Equity Home Loans

Home equity loan a good option to pay off bad debt?

We have terrible credit and would like to pay off all of our debt and start fresh. We own our home and have probably about $40,000 in equity. We'd like to refi the house, take the equity out and pay off our debt - it's the only option we can think of besides declaring bankruptcy. But honestly with bad credit I don;t know that this is even an option for us, and if it is, I don't even know where to start. Is it a good idea, and if so, where can we look for a refi that will loan to people with really bad credit? If it's not a good idea, is bankruptcy our only other option? We live paycheck to paycheck right now and don't have any other way of paying off the debt. Thanks! To the answerer telling me to "grow up" -- please don't judge. We are trying to grow up and get out of debt the best way we can. We have a ten-month old baby to consider and want to do what is best for all of us. We have made some bad choices in the past and have learned some lessons the hard way - we accept full responsibility for our past decisions and we're doing the best we can. I just need helpful guidance - not tacky comments to make me feel even worse about the situation!!

Public Comments

1. By replacing undescured debt with secured debt, you are then putting your home in increased jeopardy.
2. You wouldn't qualify for anything but a five year Chapter 13..... Grow up and if you really have 40K in equity....sell the house....rent a small apt...and have your FRESH start....sock away every penny you can and by the time you are ready to buy.....24 months or so.....your score will have risen accordingly.... It sounds like you can't afford your house.....if you are living paycheck to paycheck...
3. It would be a bad situation as U would loose your house if U cant afford to pay the mortgage. With the economy the way it is be careful. It is sad.
4. If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on. What’s the interest rate? Knowing this is crucial. The interest rate will determine<!--the monthly payment you will need to make. You also need to know if the interest rate is of a fixed or adjustable nature. Fixed rate implies that the monthly payments will remain constant, while an adjustable rate implies that rates will fluctuate depending on market conditions. http://best-loans.awardspace.com/homeloans.htm In adjustable rate, when will rates change? If your interest rate on the home equity loan is of the adjustable variety, you need to know three things: when the rate is going to change (that is under what conditions), how frequently will the rate change and what’s the average-->percentage by which the adjustable rate will change. What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.The higher the payment in terms of points, the lower is the interest rate.
5. It's always a bad idea to shift debt to another loan. But putting that unsecured debt onto your home is how folks end up losing their homes. You should take a close look at your lifestyle and spending habits. Having that much debt and living paycheck to paycheck means you are living beyond your means. Make a strict budget. Eliminate all the extras -- cell phone, cable, eating out, new clothes, etc. Take every penny you can squeeze out of that budget and put it on the highest interest debt, while making minimums payments on the rest. When the highest is paid off, move to the next, till they are all paid off. Find ways to bring in extra cash. Have a garage sale, collect alum cans, get a second job -- pizza delivery has flexible hours. Throw this at that debt. If you really work at it, you can pay off your debt within 3 years. You will have saved your house, established a good payment history, and learned some new financial management skills.
6. Getting a loan shouldn't be a problem. The amount they loan you will be less than they would have been willing to loan you a year ago, because the housing market has been slumping and appraisers and lenders are being VERY conservative to avoid being stuck with a loan that is worth less than the loan value. A history of bad credit will make you higher risk which will require a higher rate to compensate the lender for the higher risk, but it should still be doable with some lender. Where did you get he $40,000 equity number from?
7. very intereting question.Suggest you have a look here for useful tips.http://homeloan.online-assistant.info/california-home-loan-rate-refinance.html
8. Get a copy of the book "The Total Money Makeover" by Dave Ramsey. It's one of the best books I read last year. http://www.daveramsey.com/etc/cms/index.cfm?intContentID=4055 ----------- Here's the problem with a home-equity loan: If you don't pay off your debts right now, the collection agencies can scream and yell, and you might get sued in a couple years. But if you attach the debts to your house, and then don't pay, the collection agencies can (and will) take your house. ----------- You say you have $40,000 in equity. But how much debt do you owe? And how much do you owe on the mortgage? And what is your income? ------------ The best advice I have is to get yourself on a written budget, where every dollar you're going to make next month is allocated on paper this month. And then stick to that plan. Here's a series of goals for you: 1) Don't go into any more debt. 2) Write down a list of everything you owe. 3) Pay ONLY the minimums on everything. 4) Start saving cash, until you get $1,000. Once you have it: 4a) Withdraw the $1,000 as ten $100 bills. 4b) Buy a cheap picture frame. 4c) Get it engraved: "In case of emergency, break glass" 4d) Put the ten $100 bills in it. 4e) Hide it in the back of the closet. 5) Start attacking the debt. Pay the minimums on everything, except the smallest. 6) When one's paid off, attack the next-smallest. etc. It may take a couple years of not going to restaurants, but it'll be worth it. http://www.daveramsey.com/etc/tell_your_story/?fuseAction=dspReadStories ----------- And try to avoid paying "stupid tax" whenever you can. That's a tax on being stupid. One example: The $2 Ticket That Turned Into $150 By Cathy in AL "I got a parking ticket, which in my city is only $2. I wrote a check, put it in the ticket envelope, and deposited it at a pay meter. "Several months went by, and we changed banks but left the checking account open with a $0.00 balance in it. STUPID! Then WHAM! The $2 parking ticket hit the bank with the $0.00 balance. "The bank subsequently charged me $35 for the overdraft, plus bounced the check back to my local court. The court charged me $30 for the bounced check, plus the original parking fee now carried a $10 late charge. "Then, before I could get the balance paid and the account closed at the bank, they charged me another $35 overdraft fee plus a service charge on the overdrawn account. "So my $2 parking ticket ended up costing me about $150."