Ok. here is our story. My boyfriend and I have been together for 6 years we have 3 kids between us 2 mine and a 4 year old that is ours. We found this great deal on a house 4 years ago 3 bed house on 1.2 acres of land on a dead end road no traffic and in a nice neighborhood. the house was 29,000 with 2000 down at 12% interest for 12 or 15 years i forgot, our payments are 324 which isn’t bad at all. We already payed closing cost and laywer fees cause we are owner financing because my boyfiend’s credit is not good at all well at the time.
We went to the bank last week to refinance the house through the bank to lower our interest rate. His score was his scores combined put him 2 points less then what he should have been so they denied us but put our name and info up for bid or something and no finance company wanted to gamble with us.
My boyfriend brings home 3000 a month with out overtime our only bills are insurance, phone, electric and house insurance less then 800 a month, we have no car payments because we paid off both our vehicles, I get 600 a month child support that i use for my other two children clothes, shoes, there school, and the rest I buy groceries.
My question is do we pay off his old old old medical bills from 6 years ago they add up to 4,000 in all to make his credit score hire then go through the bank to refinance to 8% to save on intrest but have to pay closing cost again or do we just double up our payments to the man we are buying this house from.
Oh my boyfriend wants to borrow from his TSP and pay his self back. He has 15,000 but at the end of the year he should have 20,000 which is how much we we owe on the house by the end of the year. He said he could borrow up to 80% and he said he could take out a personal loan through his bank for the rest.
Please help what is the best thing to do. With the economy going the way it is, the more we own and the less we owe the better. I just want to get things paid off so if he looses his job one day we will only have utilities to pay for.
Sorry so long hope someone can help
I Need Some Advice About A Fast Way To Pay Off Our Home. Any One Out There Please Answer.?
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There are a few things you need to take into consideration. The good news is that you don’t owe a lot on this house. The bad news is that the interest rate is high, and refinancing is difficult because of his bad medical bills.
The first thing to do is to find out when the medical bills will come off of his credit report. In most states, it is in seven years. He could repay them, which is the right thing to do, or he could wait for them to drop off and let the drop off help fix his credit score.
So, then, the question becomes “what does waiting cost us?”. Well, at 12% interest on $20,000, you are paying about $200 a month in interest. The rest of your payment is going to the principal balance and taxes. If you can drop that to 8% interest, the per month interest cost drops down about $135. So, it would save you $65 a month to refinance. But, it might cost you $4,000 to pay off the medical bills and $2,000 to refinance. So, that $6,000 in costs would have to be compared against $65 a month in savings. It will take almost 8 years to make that a worthwhile trade.
Stay away from using the TSP as a source of financing. For two reasons. (1) You can borrow for a house, but you can’t borrow for retirement, and there is great value in saving for retirement when you are younger. And (2) If your boyfriend leaves his job for any reason (illness, layoff, just quits), that money is due in FULL within 30 days. If he cannot pay it in full within 30 days, then it is considered a withdrawal and will be reported to the IRS. He will have to pay taxes and penalties of close to half of the amount, and he will not be able to finance it.
My recommendation: Find ways to pay a little bit extra against the loan to reduce the balance. Increasing the payment by just $300 a month will get this paid off in about 5 years. Maybe you could get a part time job and use that pay as an extra payment against the house. Or, when the medical bills drop off his credit report, look again at refinancing with a bank. You also might want to check with your city/county to see if there are any low-income loans that you could use to offset some of this loan.
See if some of the land could be sold or leased to someone to generate some income.
Also, there is a website where you can do a self-screening for government assistance programs. See if that has something to help. http://www.benefitscheckup.org.
Good luck. And don’t discount being a stay at home mom when people ask for work experience – that is plenty of work. Just find ways you can translate what you do at home into what needs to be done on a job. For example, you are a cook, cleaner, record keeper, caretaker. Or find ways you can volunteer in the community, maybe at the library or PTA, to develop references for jobs outside the home. There are not a lot of legitimate work at home situations.
You can do either. If it was me then I would pay off the medical first. that way your debt to income ratio wouldnt be as high and would better your chances at refinancing at a better rate. In the meantime, if you can afford to pay any addtional principal to your morgage along with paying more on your medical then do so.