Hi - I am looking for advice/comments, anything....

i have a $227,500 mortgage (probably down to $220,000 now) at 4.98% for another 3.5 years. I paid $302,000 and put $75,000 down. Right now I think my apartment is worth between 310,000 and 350,000.

I have 3 major debts - $7,000 at 17.99% ($150/month minimum payment), $5,000 at 6.99% ($100/month minimum payment) and $20,000 credit line ($133/month interest payment).

Work has reorganized and as a result, I am making app. $150 less every 2 weeks. So this has now things are really tight.... So my question is:

should I try and consolidate my debt into my mortgage either by refinancing completely or trying to add to my mortgage (is this even doable?) or getting a home equity line of credit (i think this might be a bit difficult with my bank as they will only advance up to 75% of the purchase price not the assessed value.

any comments or advice is welcome... Thanks

Well, you're going to probably hear a lot of replies about how bad it is to roll your other debt into your house and about how it's not going to help you out because you need to stop the bad habits that caused you to get into debt in the first place.

So putting that aside.

How long have you owned the house? Banks typically use the purchase price for the first year when considering home equity loans, 2nd mortgages, home equity lines of credit, etc. This doesn't mean you can't find a local bank or credit union who will allow you to have the house appraised and use that value without owning it for a year. It can be done, believe me, I've done it already. The problem with getting a new appraisal is the purchase price history will effect the appraisal, pending any improvements you made after you bought it.

So if you paid $302,000 for your house the worst case scenario is they would consider that the fair market value of the house and give you a Home Equity Loan, HELOC, or 2nd mortgage based off that.

There are banks who will give up to 90% of the value of your house, typically they only go up to 80%, and I don't know any that only do 75% but I'm sure they exist because you said so. Even if you only can get up to 80% of the 302000 that will give you 241,600 minus whatever your mortgage is down to now (220,000) minus any fees they charge.

You should end up getting at least 15,000 out of the deal. That would be enough to get rid of that high interest card (don't want to know how you have a debt with 17.99%), and I would probably hold the rest as a cash reserve, perhaps put some of it toward the other debts.

To answer your specific questions, you can't usually add it to your mortgage, but you will be able to get a HELOC if you want. You don't have to use the bank you have the mortgage through to get a HELOC, you can use any bank or credit union or lender that you want.

Do you want to do it? That's up to you, but if things are so "tight" and you can't cut out some of the other luxurious expenses, such as, eating out or bad habits, then; yes, you will want to do it if you are not able to make payments.

Keep in mind the very first paragraph of this response

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I would stray away from doing anything regarding refinancing or making any sort of changes to your current position in the market. Not that the housing market is doomed I just feel that as regulators dig into recent sub-prime mishaps there may new loan programs that could possibly play into you favor. At the end of the day anything you decide to do at this point in regards to your home will set your retirement goal back for years. The credit card debts are minor and you can probably find some 0% offer balance transfers to reduce the interest expense on these unsecured debt.

Thanks vanman2099;5698 - I've owned for 16 months, i actually ported my previous mortgage over... would that wualify for a reassessment ofthe property value?

i also forgot to mention that i pay $670 accelerated bi-weekly - should i look at reducing that to a bi-weekly paymetn only ($50 savings) until things straighten out at work and apply that to my credit cards and just transfer the large balance to a smaller % card and pay them off over the next 5-7 years...?

I assume that you already know that whatever steps you take won't solve your problems as you have to change your spending behaviour in order to avoid ths situation once you solve it.

I would not recommend to refinance right now. You may be able to transfer some debt to 0% CC but be careful, it is a dangerous game and if you miss only one payment or are just late on it you have lost the game.

Minimum payments will not help you to get out of debt so you need to pay more then minimum to tackel your debt problem.

You can try to consolidate all three debts into one debt but that only makes sense if you can safe on interest payments.

I would work on cutting luxuries to free up cash. The problem is that the majority approaches home-ownership the complete wrong way and then experience financial problems.

You have to cut your liabilities. I doubt that you are willing to cut your biggest liability, your apartment, so you have to work on cutting the other liabilities and focus to acquire assets.

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