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Here is my situation:
My wife has her name on the mortgage for our house as I went through a bankruptcy 1 year ago. Were paying 5.25% on an FHA loan, which means we're paying a mortgage insurance premium. We have plenty of equity in our house (45K), but my wife doesn't have the credit score (or debt to income ratio) to refinance into a conventional loan to avoid the MIP, and if she refinances to a lower FHA rate, the increase in MIP would offset any savings we'd get from the lower rate.
I'm trying to determine my options. On my own, it doesn't appear that I have many.....but
A friend of her family's is a muti-millionaire (100 mil I think). Should I ask him to pay off my mortgage and see if he'll accept monthly payments directly to him? I could pay him 10% and still have the house paid for in 15 years if I keep the payment the same as it is now. He would likely have to pay higher taxes as it would be considered an investment property, so this may increase my payment as well.
Any thoughts? I'm just trying to stretch my dollars and paying MIP feels like I'm throwing my money in the garbage.
Any advice is appreciated.
It would be hard for anyone here to give you advice on that matter. I have found that becoming "business partners" or just asking a friend to loan some money can be a bad thing. I am by no means telling you not to consider it, but beware of how your relationship can change due to it.
I can fully understand your pain of MIP though. I wish you the best of luck and I am sorry that I cannot give you better advice. If he would do it, it sounds like a good deal. Keep in mind though that your property taxes would not be getting paid by the bank at the end of the year so you will be responsible for saving that money instead of having it taken out with the mortgage.
How long has your wife had the mortgage?
How much money are you trying to save by paying off the mortgage with your friend's money?
In my opinion, it would not be a wise thing to do (involve your friend) even if your friend was willing to do it. There are other costs besides money when you borrow funds from your friend like you are planning to do. I am referring to emotional costs.
The math is confusing me.
Would you care to disclose the Mortgage terms?
I would not borrow money from a friend. Even asking causes things to be weird.
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@beegeez wrote:Here is my situation:
My wife has her name on the mortgage for our house as I went through a bankruptcy 1 year ago. Were paying 5.25% on an FHA loan, which means we're paying a mortgage insurance premium. We have plenty of equity in our house (45K), but my wife doesn't have the credit score (or debt to income ratio) to refinance into a conventional loan to avoid the MIP, and if she refinances to a lower FHA rate, the increase in MIP would offset any savings we'd get from the lower rate.
I'm trying to determine my options. On my own, it doesn't appear that I have many.....but
A friend of her family's is a muti-millionaire (100 mil I think). Should I ask him to pay off my mortgage and see if he'll accept monthly payments directly to him? I could pay him 10% and still have the house paid for in 15 years if I keep the payment the same as it is now. He would likely have to pay higher taxes as it would be considered an investment property, so this may increase my payment as well.
Any thoughts? I'm just trying to stretch my dollars and paying MIP feels like I'm throwing my money in the garbage.
Any advice is appreciated.
No.
Loans and friendship do not mix, and nearly always result in the loss of the relationship. Just asking for the loan could change the dynamic of the friendship, and it puts your wife's friend in a very uncomfortable position. That aside, if I was your wife's wealthy friend, I would be irritated that anyone would feel it's their prerogative to hit me up for a loan (unless it was a life or death emergency).
Try working on your wife's credit, so that her score improves. You can also focus on rebuilding and repairing your credit so that you can refi together. Once your scores are ok, work with a mortgage broker who has access to multiple lending sources for help with your refi.
You can potentially have the MIP on a FHA loan removed IF 1) the loan has been active for at least 5 years and 2) the loan-to-value ratio has dropped to at least 78%.
If your loan was originated AFTER 6/3/13, the rules are different than quoted above. I was assuming your loan was older than that...
I'd be more than happy to borrow from your millionaire friend since i don't know them.
Otherwise there are countless stories on the internet on why to NOT mix money and friends.
Finances can strain friendships. The road to success is paved with good intentions. You would have to do some soul searching on this one.