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Excuse any Newby mistakes, this is my first post:

I just got my SSI Disability and also owe more on my house than current market value due to 2 mortages. If I got rid of my HELOC, then my primary mortgage would be in line for the fare market value of my house. My HELOC is "maturing" from an "intrest only" payment (1st 10 yrs), to P&I (last 20 yrs of this 30 yr Line-of-Credit).

What would be my best plan of attack so I can "get rid of" my HELOC and just have my primary mortgage? I will be looking to sell, move, and downsize in the next 3 or so years, and can not "bring money to the table" at closing. I would love to break even, or possibly even get a little cash, when I sell. My credit is in the high 780's, almost at 800.

Options? (PS: Both Primary and Secondary lien holders are the same bank!!!) Thanks to all that read and reply...

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  • Your best plan of attack is to find a way to pay off the HELOC, which is probably higher interest and is about to become even more expensive. I don't know any other way to get rid of it short of refinancing it (if you could, and that just lowers it -- if you're lucky) short of declaring bankruptcy (kiss your credit rating, and most of your net worth, goodbye).
    – keshlam
    Sep 13 '15 at 17:24
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    Can you put some numbers to this? It seems even after paying down the HELOC 100%, you might have to bring money to the table when you sell this house. Sep 13 '15 at 17:44
  • Thank you both for your responses. To JoeTaxpayer's question, HELOC is $35K at 2.5% adj & 1st Mortgage is $98K at 3.5% adj. Mo pymts are ~$95 for HELOC (Interest Only, changing Jan 2016 to P+I), and 1st Mortgage is ~$575. I pay my own Homeowners Ins & Taxes. (no escrow.) Est retail value of home is about $100K. All this seems like little money, until I got disabled. Now I am currently running in the red every month by ~$250. Can't payoff HELOC, kesh. Had to liquidate all assets to survive for 5 yrs while I fought to get disability, which only paid 1.5 yrs back. This paid off all CC & car.
    – Zander S.
    Sep 13 '15 at 18:58
  • I have nothing to suggest, then, I'm afraid.
    – keshlam
    Sep 13 '15 at 19:05
  • Thank you for your time, keshlam. I appreciate you responding to my post.
    – Zander S.
    Sep 13 '15 at 19:30
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To littleadv's comment, walking away may be the best option. If your numbers are as described, any ideas we could offer on earning or raising cash would be best to use as money to live on, not to pay down a loan on an under water house. the double wide you propose to buy will like cost less than your HELOC balance. I'd see if you could buy that home first, renting the house, and only default after you're in the new place.

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    Or not default at all, if rental on the house covers the loan payments (plus a bit?) and see if it can regain some value.... Being under water is only an immediate crisis if you are forced to sell.
    – keshlam
    Sep 14 '15 at 3:41
  • Will this work? Since both my 1st and 2nd mortgage are the same bank, and I have been paying them for 10 yrs on time, has anyone seen, or is it possible, to combine these 2 into a lower loan amount, with a higher APR, and sign a new 30 yr mortgage? Big picture is that they have already made $ off me for 10 yrs and now will make more money for a longer time. Is this a possible/probable answer (my monthly outlay would stay close to the same, yet they go from me owing $135K for 20 yrs to $100K for 30 yrs at a % point higher interest?) Thoughts?
    – Zander S.
    Sep 25 '15 at 19:00
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I apologize in advance if this seems heartless, Lord knows many on this site would consider me such, but it is my intention to be helpful.

Rhetorically: Given your disability, could you find a different line of work that would have earn you a decent income? You mentioned fighting for disability for 5 years. Could that time have been spent creating a different occupation? Could you still do so?

As you mention these are not large numbers prior to disability, but post-disability they are overwhelming. The tone of your post suggests that you feel trapped and helpless, and I really hate that for anyone. In some ways you are so close, just another $300/month puts you in the black!

My encouragement would be to find a way to make this work. Find a way to earn more and you can keep your house and car.

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    Not heartless, just practical. Your answer prompts the question - How much, if anything, can you earn and still get SSI? There's a catch-22. Not well enough to work full time, but discouraged from doing anything since SSI might be taken away for making a small side income. "Could that time have been spent" - not helpful, but "Could you still do so?" makes up for it. Sep 14 '15 at 20:40
  • No apologizes needed. Any info is good info. As for additional income, MediCAID watches my finances like a hawk, so I can not even have a saving acct, or then they consider me not "needy" of them paying the 20% that Medicare does not cover. Plus, if I get a PT job, then Medicare will state that I CAN WORK, & will take me off their benefits (Income + Insurance). That was one of the major battles that took 5 yrs & for me to finally get an appeal in front of a judge to show that I could not work. I can not jeopardize everything I have worked so hard to get. (Income includes renting out my house.)
    – Zander S.
    Sep 15 '15 at 17:05
  • Since both my 1st and 2nd mortgage are the same bank, and I have been paying them for 10 yrs on time, has anyone seen, or is it possible, to combine these 2 into a lower loan amount, with a higher APR, and sign a new 30 yr mortgage? Big picture is that they have already made $ off me for 10 yrs and now will make more money for a longer time. Is this a possible/probable answer (my monthly outlay would stay close to the same, yet they go from me owing $135K for 20 yrs to $100K for 30 yrs at a % point higher interest?) Thoughts???
    – Zander S.
    Sep 15 '15 at 17:18
  • @Zanders: It can't hurt to ask the bank whether they'd let you consolidate into a longer-term loan. They might go for it, they might not, depending on what they think your future finances might look like.
    – keshlam
    Sep 25 '15 at 22:52
  • Thanks for your input, keshlam!!! Anyone else? Anyone in Banking???
    – Zander S.
    Sep 26 '15 at 21:50

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