No options for Home Equity loan...

[tcbofade]

Argh.

More than $70k in home equity, and no way to use it.

LOTS of CC debt, DTI is the killer.  Wifey has scores in the 630's.  Current DTI is 90%...if we took a home equity loan up to 80% LTV, it would reduce her DTI to 66%, but that's still to high to get anyone to actually write it.

Can't refinance the whole thing yet either.

Seven years plus of perfect payment history, no blemishes on credit reports at all, just LOTS of CC debt.

Any ideas?

[cartwrna]

Can they not write it up to where the home equity loan will pay off the CC debt? I'm not to knowledgable on cash out refi, but may be worth looking into. Your only other option is to get a plan in place to pay down your CC debt and then do your cash out refi. That would be my first priority! CC debt is a bad bad thing :-/

[StartingOver10]

It is really not a good idea to move unsecured cc debt to your home anyway. I understand that it is probably very uncomfortable in your situation right now. What others have done is one of the following when they can't manage personal unsecured debt or the debt spirals to high levels:

• Sell the house and pay off the credit cards - but not before getting the spending under control. This is drastic too, but a good solution when you have equity that you can't access. 
• Or, get a roommate and put all the rent they pay toward the cc debt.
• Or work out a new budget to pay down the debt - sell things around the house to make a dent in it, pick up a second job and throw all the cash you can to the credit cards or some other revenue generating activity. This assumes you aren't adding to the the balances. 
• Or a more drastic measure would include a Ch 13.  You probably aren't there, but it is worth mentioning as an alternative.
• Or check out DaveRamsey.com for budgeting ideas (getting down to a rice and beans type budget until the debt is paid off)

[tcbofade]

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@cartwrna wrote:
Can they not write it up to where the home equity loan will pay off the CC debt? I'm not to knowledgable on cash out refi, but may be worth looking into. Your only other option is to get a plan in place to pay down your CC debt and then do your cash out refi. That would be my first priority! CC debt is a bad bad thing :-/

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Can they, or will they?   Argh.

Yes, there's more than enough equity to pay off all of the CC debt, however, if bank x were to actually WRITE that mortgage, her back end DTI would be over 50%, so no bank will write it.

Thanks for the thought tho. 

[tcbofade]

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@StartingOver10 wrote:

It is really not a good idea to move unsecured cc debt to your home anyway. I understand that it is probably very uncomfortable in your situation right now. What others have done is one of the following when they can't manage personal unsecured debt or the debt spirals to high levels:

• Sell the house and pay off the credit cards - but not before getting the spending under control. This is drastic too, but a good solution when you have equity that you can't access.    Not an option for another 18 months or so...  public school, street address, yadda, yadda, yadda....
• Or, get a roommate and put all the rent they pay toward the cc debt.  Hard to do with a family of five in a three bedroom house. 
• Or work out a new budget to pay down the debt - sell things around the house to make a dent in it, pick up a second job and throw all the cash you can to the credit cards or some other revenue generating activity. This assumes you aren't adding to the the balances.   Already working a second job...some months the balances go down, some months they go up....
• Or a more drastic measure would include a Ch 13.  You probably aren't there, but it is worth mentioning as an alternative.  Getting awfully close...trying to avoid it.
• Or check out DaveRamsey.com for budgeting ideas (getting down to a rice and beans type budget until the debt is paid off)  Unfortunately, I know too many Ramsey failure stories to consider his methodology worth the risk...  I'll keep my wife and kids and just be broke, thanks. 

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Thanks for the thoughts tho.

Youngest is a junior in high school.  In May or June of 2017, she'll graduate from the local high school and we'll no longer need this address.  Wifey not convinced yet, but I'm thinking that we'll sell out and move to cheaper location.  (Local school district is in the top five of the state....and we PAY for it....)

Cannot imagine the roommate thing at this point in our lives.

Haven't sold the children yet, but we don't have cable, our internet is free (to us) and we do not eat out often.  Can't say never, but not even weekly.

Chapter 13 IS an option, but not what I want to do.

Dave Ramsey is a nut...OK, he gives some awesome advice and has sound logic, but his priorities are a bit different than mine. 

[pizza1]

Have you checked out Lending Tree??

Also, I like SO idea. Sell the home , and move someplace cheaper for awhile, sock some money away, pay off all your CC debt, and then buy again.

[KatieKatie]

Many home equity lenders will allow you to pay off your existing debt with proceeds at closing and back that out of your DTI, but if that would still leave her DTI ratio too high based on the size of home equity loan you would have to get, it does not sound like that would work.  Could you look at a long term, say 20 years for the home equity loan?  Would that help the DTI?  The only other option sounds like a cash out refi although that's typically 80/20, I would think this could help the DTI since you would be amortizing the full amount over 30 years, assuming the interest rates are lower than or similar to your first mortgage.  I would suggest contacting a creative mortgage broker and a few credit unions.  

[StartingOver10]

Pizza, lending tree is a lead generator for lenders, not a lender itself. It is one way to get tons of inquiries and no actual viable lenders for his situation.

[thebanjoman]

Any chances for a lesser solution that will help make the debt more manageable, such as a unsecured personal loan and/or lower interest balance transfers? It may not be ideal, but if it can better secure or accelerate the generally-going-down nature of your balances.

I'm guessing it's too early to revisit the idea of a full refinance cash out to achieve the same goal.

I also have to ask if theres any viable options to help improve the income side further. I know you're already working two jobs, but is there a chance of a raise at any employer or a change of employment for better pay or benefits? Even short-term cash boost like selling old or unwanted/unneeded items? Lower paying options to help improve income might be online surveys and/or secret shopping, but they may not make much of a dent.

[Anonymous]

Why do your balances go up some months? What's going on in your budget that you're spending more than you're bringing in? This won't get fixed until that's resolved.