Posted by Susan L.–FL on December 12, 1999 at 12:22:26:
Don’t know if you replied, or not, but someone else’s reply ‘attached’ to your post.
I can’t wait to hear what happened!!
Susan
Help! What would YOU do? - Posted by Mark
Posted by Mark on December 08, 1999 at 19:13:15:
Thanks for taking the time to read this. This is my first post here.
My situation: I bought a small, unfinished house on 7 acres in the Ozarks 3 years ago. I used money from a cash advance on my credit cards (this gets embarrassing, so bear with me)to buy it and to finance the remodeling and addition of a 2nd bedroom, bathroom, laundry/closets. The house is 98% finished and is probably worth about $60,000 (not sure). Due to some ex-wives and some poor investments, I had to borrow more on my cards to pay off some big debts. I also got married last summer to a woman who has some large debt and not so great credit. To make a long story short, we owe $125,000 (includes $40,000 student loans) and have a property that might be worth 60-70K. Our combined income is around $57,000. 2 banks in my little town did not seem too impressed with me! We really need to get out from under the big credit card debt, but it doesn’t look likely any bank will give us a new mortgage. Any ideas on how I might get myself out of this situation? Thanks in advance.
Re: Help! What would YOU do? - Posted by Oliver Stewart Jr
Posted by Oliver Stewart Jr on December 12, 1999 at 16:53:38:
Even though I own some rental property and could give you advice alongs those lines, I don’t think that is your problem. You need to get that weight of debt off of you. I have a Master’s degree in Computer Systems and had taken advanced level accounting classes… None of that meant squat or kept me from getting $30,000 in debt. I took a $25 dollar class at my local community college that has help me turn the debt ship around. I will share the plan with you. It does require some math. But I am confident that I can show you how to pay all your debts off in including your House in 5 to 9 Years. That’s right including your house. This is what I will need to do the math and send the plan back to you. 1. A list of all your debts. 2 The minimal payment for each debt. For example, Credit Card 1 Total debt $6500, Minimum Monthly payment 160. Also. on any mortgages I need the principle payment ONLY not the taxes and insurances. The course I took is called Debt Free and Prosperous Living. If you have Yahoo, or any search engine, search for that title. Since you don’t know me from Adam, it should be easy to send me this info. Do NOT send me any account numbers. I have been in the plan a year. It will cosy you absolutely nothing…ever. Did you hear that noise??? The ball just bounced in your court.
Re: Help! What would YOU do? - Posted by GL
Posted by GL on December 10, 1999 at 10:57:30:
To look at your situation in more detail. If you owe $125000 you are probably paying out $1500 - $2000 a month in payments. That is the trouble. You are paying such a large portion of your income that the banks do not feel you can afford another payment.
You must emphasize that you are going to use the money to pay off your bills.
Now suppose you fix the place up nice and the appraisal is $70000. On a conventional loan you should be able to get 75% of that which is $52500. Now suppose you pay off the worst highest interest bills. By the way if the bank is suspicious you can let them send out the checks from the mortgage proceeds instead of giving you the cash.
If you pay off $52500 lets say that it’s all bills with 1.5% per month interest. That would eliminate $787.50 in payments. But the mortgage payment would be about $325. So you would save $462.50 per month. This would bring your payments down to a total of $1000 - $1500 which is more like it.
The usual rule around here is this. No more than 33% of your income should go in payments. Including housing costs such as mortgage, taxes, electric bill, insurance etc. plus all other payments. So if you paid off your worst debts with a new mortgage you would be just about there.
And you can point out, if you are making your present payments you can certainly cover a lower total payment!
Now if you keep paying out the same amount you are now, that will mean $462.50 can go to paying off the principal each month, that used to go in interest.
That means you can pay off an extra $5550 the first year.
Now the second year you will save $83.25 per month interest on the $5550 you paid off. So you can pay $545.75 per month which is $6549 per year.
Every time you pay off a dollar of principal it goes a little quicker.
Sit down and figure out what you could do along these lines. Work out a realistic plan that you can show the bank. Also the usual financial statements. This sort of planning impresses bankers.
When you have everything ready you might call the bank and arrange an appointment with the bank manager to “ask his advice” about your financial situation. Show him your plan and financial statements, explain your situation and ask what he thinks you should do.
There is no reason you can’t ask the advice of every bank in your area if you want to. I bet one of them will offer you a mortgage. If not there are other lenders.
Come back and let us know what happens.
Re: Help! What would YOU do? - Posted by GL
Posted by GL on December 10, 1999 at 08:45:26:
Why won’t they give you a mortgage? You both have a job, you own the house outright, and you pay your bills. Any bank would jump on the chance to loan you money in a minute.
If your credit is good then that leaves the property. There are really only 2 questions in the back of their minds. 1) Will this guy pay us back? 2) If he doesn’t can we sell the house real easy and get our money back that way?
The property should be real saleable looking when they come to appraise it. The buying public likes everything all finished and nice so that is what the bank likes. If is 98% finished get cracking on the other 2%, it makes a big difference. You want to make it as nice as a model home in a subdivision. Also landscaping is important. Cut the grass plant some bushes or trees etc. Nothing adds more value for less work or cost than landscaping. Also painting.
Now you can get the best (highest) appraisal because your house is real pretty. Ask every bank in your area about the loan. When they ask why you want a loan explain that you want to pay off your debts and get a lower interest rate. They will love that. They will look at your payment history, realize that you are not increasing your debt, they will look at the big appraisal and your pretty house and they will all want to lend you money. Then pick out the best deal and negotiate from there.
When you get the money pay off your worst (highest interest) loans. You will find your new house payment is less than you were paying on the loans you paid off. So keep putting the same amount into payments each month. Use the extra money to pay off your credit cards etc. If you can commit extra money to paying off these debts do so.
Soon you will be in good shape financially. The more you pay off those high interest loans the better.
Re: Help! What would YOU do? - Posted by Barbara_NY
Posted by Barbara_NY on December 10, 1999 at 04:23:30:
I’d need a bit more info to comment, but will try.
You didn’t say what you bought the property for or what the repairs have cost. That would be essential for an investor to determine if you have any wiggle room. If you bought really low and the repairs kept you at least 90% under market you may have a shot. The more below 90% the better (including total repair costs - whether you’ve done them or they will be passed on).
If the cushion is large, I’d place an ad in the local paper(s) for a handyman special. I’d also hit the marketing trail HARD. I’d call every I buy houses ad there may be in your paper. I’d call every realtor and tell them exactly what you want and see if they work with any developers, contractors, investors or joe publics interested in rehabing. Don’t sign any type of exclusive agreement with a realtor though since time is tight.
I’d also call every contractor, developer, handyman, landscaper, etc in the book or who advertises locally to see if they or someone they know may want it. If it is on 7 acres a developer may be interested in rezoning (if posisble) and developing.
Depending on what the margin is you may only break even but it is better than being in debt. I’ve paid my share of “life seminar” dues as have many of us, so don’t let it get you down.
Good Luck.
Oliver, I am very curious (and interested) in the course you mentioned in your post. - Posted by SusanL.–FL
Posted by SusanL.–FL on December 15, 1999 at 11:22:24:
Hi!
Was it sponsored by Larry Burkett?s group (Christian Financial Concepts)? His courses deal in debt-free living also. He had a financial radio show and has published quite a few books on the subject.
Would you be able to figure out a course of action for me? Would be glad to compensate you for your time. However, I must warn you, I may be paying you in food stamps by the time you read this. (only kidding) 
Mainly, I?ve just been ?winging it? on my own trying to get back on track again ---- but any tips you could share might help.
My debt was about 4xs Mark?s (have since whittled it down substantially). Outlay for bills was $4,000, sometimes $5,000/month.
No longer have the income to support the debt, hence?my problem! Constantly playing ?catch up? each month ? plus paying late fees out the whazoo.
Thanx! Susan
(I know I will get there eventually, but any little tips in the meantime might give me an ‘edge’.)
Re: Help! What would YOU do? - Posted by Mark
Posted by Mark on December 10, 1999 at 07:08:59:
Barbara, sorry I wasn’t more clear. I bought the property at auction for 19K to remodel and live in. I’ve been camping here for 3 years while finishing the house (and working full time at a children’s crisis center). I’ve spent about 25K remodeling, so I have about 45K in the place. I am GUESSING that it will appraise at 60-70K. I really don’t want to sell, but will if there are no other alternatives. I’ve got a lot of ME invested here too! Thanks for replying. -Mark
Being debt Free - Posted by Jonathan Rexford
Posted by Jonathan Rexford on December 15, 1999 at 12:32:43:
Susan,
The Debt free and Prosperous Living Course was developed by Financial Independence Network Limited (FINL) I have several courses available along with software available. (FINL) has gone out of business. It was a MLM/DIRECT SALES COMPANY. The concepts work I am out of credit card debt and my personal home will be paid off in 2 years. I belive that realestate financing is a great way to accumulate wealth but I just want to own my personal home. If you would like to talk to me a little a further I can be reached jdrrtr@aol.com or call My office at 561-569-4087 Oh BTW I live in Vero Beach Florida where are you from.
Jonathan
Re: Help! What would YOU do? - Posted by John (WA)
Posted by John (WA) on December 10, 1999 at 16:29:33:
- Forget the banks.
- Try a consumer credit counselor. If you are close to going under, see if you can get your payments restructured.
- Find a couple of brokers to take a look at your situation. If at all possible I’d advise you to stay away from a 125 loan. With what you have described you will likely have to pay a fairly high interest rate on that kind of loan. Should something happen that would force you to move you would be stuck. With semi-expensive money on the loan, it would be hard to give it away. In my opinion, 125’s are a last resort.
Re: Help! What would YOU do? - Posted by Barbara_NY
Posted by Barbara_NY on December 10, 1999 at 15:17:17:
Is there any more work to be done? If so, about how much money would you guess it would take to finish?
You should be able to find out what the market value is by asking a local realtor what he/she thought you could get for it. They have access to recent sales data in your area and can check out sale prices vs. your property type. Depending on how many houses like yours there are in your area, i.e. # of bedrooms, baths, total # of rooms, garage or not, brick or frame, lot size, sq. footage, etc. you can look at the “for sale” section of the paper to get an idea of what others like you are asking for their property. Call a few. Ask quesitons to see how comparable they are. If you have a lawyer maybe he has a contact at an appraisers office or title co. who might do a favor and give an idea of what the value might be. Go to the library and ask the reference desk person if they have any local statistic regarding property values… maybe recent newspaper articles on the subject. Call the local board of realtors and ask them. I did and got a wealth of info for one of my local counties. Be creative. Be bold. Ask for what you want.
Let me know about the level of work outstanding and I’ll try to brainstorm further.
Barbara
I MAY be in touch! - Posted by SusanL.–FL
Posted by SusanL.–FL on December 15, 1999 at 14:50:37:
Thanx for the info.
Fortunately, I JUST paid off the last credit card…but still have 4 sizeable outstanding loans, ECL on house + house and 2 car payments to still knock out.
I feel like I’m taking a half step forward and two steps backward. Slooooooooow going…
Thanx for your info!
Susan
P.S. We are over at Bradenton (near Sarasota).
BTW, I am REAL familiar with Vero Beach! Do you know where the 5 crossroads intersect (i.e., the main hwy. that crosses over from Boca Raton to Tampa)?
I had just finished an assignment with IBM and was driving back to my condo in Tampa. (No street lights over there at night.) I was pulling into a restaurant area for gasoline, missed the driveway COMPLETELY and went straight down into a storm drainage ditch! Broke the axle. It was like the earth had suddenly swallowed up the car! I had everything from my apt. loaded in the car–EVERYTHING came flying forward … then suddenly my two little dogs crawled out from under my file cabinet that had rested on the dash.
Lucky we weren’t wiped out! (It was a friend’s class '65 Chevy Impala…oops!)
I do as little night driving as is feasible these days.