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ct
07-14-2005, 12:36 PM
Anyone here have a 2nd mortgage, or ever looked into it?

I'm looking for some equity cash out on my home, but have a great interest rate on the 1st, so won't touch that. Looks like our best option is a 2nd mortgage, to use to pay off a credit card and make the switch to debit/cash spending only. Looking for some experienced opinions on how it worked out for you, or any pitfalls I should beware of?

Any input would be appreciated. Thanks!

KUalum
07-14-2005, 12:45 PM
Not that I am a master financial advisor, but I would recommended NOT taking out second mortgage to pay off credit card debt. The only reason is because I would never replace unsecured debt with secured.
I know that it is tempting and you can think - wow a lower interest rate, tax deductible etc, but IMHO - it is much better to play the balance transfer game, keeping the original card (if it has been an account open for a long time with good standing) but not using it and transferring the balance from 0% offer to 0% offer as they expire and canceling each after you transfer the balance. Not paying interest will help you pay them off very quickly (at 335/mo. - that's 4K a year).

Amnorix
07-14-2005, 12:48 PM
Not that I am a master financial advisor, but I would recommended NOT taking out second mortgage to pay off credit card debt. The only reason is because I would never replace unsecured debt with secured.
I know that it is tempting and you can think - wow a lower interest rate, tax deductible etc, but IMHO - it is much better to play the balance transfer game, keeping the original card (if it has been an account open for a long time with good standing) but not using it and transferring the balance from 0% offer to 0% offer as they expire and canceling each after you transfer the balance. Not paying interest will help you pay them off very quickly (at 335/mo. - that's 4K a year).

I agree if you're adept at playing the balance transfer game.

If not, or if you've exhausted it, then a home equity line to payoff CC debt is a good idea as long as you're not just going to go run up your CC account again. If you're going to do that, then you need to radically readjust your income/spending situation.

Amnorix
07-14-2005, 12:49 PM
Keep in mind that ANY interest paid on a home equity line is going to be tax deductible. So if you're thinking about buying a car in the near future, for example, or renovating the house, and planned to finance it, then make sure the equity line is high enough to pay off your CCs and pay for the car, etc.

Simplex3
07-14-2005, 12:50 PM
I agree if you're adept at playing the balance transfer game.

If not, or if you've exhausted it, then a home equity line to payoff CC debt is a good idea as long as you're not just going to go run up your CC account again. If you're going to do that, then you need to radically readjust your income/spending situation.
That's the key. Don't bother trying to get out from under the rock until you've found a way to stop winding up under it.

Rain Man
07-14-2005, 12:55 PM
Home equity loans are great as long as you pay it off religiously. Otherwise, it'll eat you alive.

I got a second mortgage on my house when I bought it to do a number of repairs. It was a fair amount of money, but still less than a quarter of my purchase price. I then eventually rolled it into a refinance. While it made sense to do it, and indeed the repairs had to be done, it's still a little frustrating that after nine years of mortgage payments, I still owe more on the house than the original purchase price.

Hog Farmer
07-14-2005, 01:52 PM
Play the balance transfer game. I've done it for years. Haven't paid a pennies interest on credit cards in about 10 years. I've always had about 5-10 grand floating around on them. It really really is a great way to use somebody elses money for free.

cookster50
07-14-2005, 01:54 PM
Play the balance transfer game. I've done it for years. Haven't paid a pennies interest on credit cards in about 10 years. I've always had about 5-10 grand floating around on them. It really really is a great way to use somebody elses money for free.

Doesn't that kinda mess up your credit score having so many credit cards? Even closing them after you use them, they stay on your report for awhile.

ct
07-14-2005, 01:55 PM
All good advice, thanks!

I've looked into the balance transfer game over and over. Called a half a dozen CC companies to fully review the details. Where they get ya is the radical minimum payment calculator.

So sure I can roll my x thousand balance over to a 0% transfer deal, but now I'm paying $150 more a month than before. If I could afford that, then yes it will reduce the debt, but if I can't, there is nothing to see here.

ct
07-14-2005, 01:58 PM
Doesn't that kinda mess up your credit score having so many credit cards? Even closing them after you use them, they stay on your report for awhile.

Would love to know exactly how much of an effect this would have. Been curious for a year now since I've been considering all this. Sure wish I'd pulled the trigger a year ago on a 2nd mortgage, when rates were lower. too little too late

KUalum
07-14-2005, 01:58 PM
I have suffered no negative effects. Although I only trasferred 2 times - it'll only take 2 0% offers and less than 2 years to completely eliminate all CC debt. I think that it's all about how many you do. Plus if you have a new one approximately every year and cancel the one before I don't think it would make much difference as long as you keep the original open and at a 0 balance. That shows long-term established credit with a high limit and low balance.

KingPriest2
07-14-2005, 02:00 PM
Doesn't that kinda mess up your credit score having so many credit cards? Even closing them after you use them, they stay on your report for awhile.


Balance transfers hurt your credit score. Do not do it

Equity lines of credit in you case is the best way to go but do pay it off as best you can.

You want to keep 3 to four cards open and at no more then 50 to 60 percent of the limit If not then your credit score will drop

DO NOT open and close credit card accounts

Keep your cards that you have had the longest. The longer the history the better for you credit score


If you need some more info just email me I have been in the mortgage business for the last 5 years

Amnorix
07-14-2005, 02:04 PM
Balance transfers hurt your credit score. Do not do it

Equity lines of credit in you case is the best way to go but do pay it off as best you can.

You want to keep 3 to four cards open and at no more then 50 to 60 percent of the limit If not then your credit score will drop

DO NOT open and close credit card accounts

Keep your cards that you have had the longest. The longer the history the better for you credit score


If you need some more info just email me I have been in the mortgage business for the last 5 years

I won't argue with you, but I will note that if you're not planning on doing anything significant with your credit situation in the mid-term, credit scores aren't wildly significant. In other words, if you plan to live in your house for the next 20 years, and don't plan to buy a car in the next 5, what you do over the next couple years won't necessarily have a big impact on anything.

MOhillbilly
07-14-2005, 02:08 PM
whats a mortgage?
can i get one if my house is paid off? small loan w/ low intrest rates?
looking to add a room and bathroom.

ct
07-14-2005, 02:09 PM
Balance transfers hurt your credit score. Do not do it

Equity lines of credit in you case is the best way to go but do pay it off as best you can.

You want to keep 3 to four cards open and at no more then 50 to 60 percent of the limit If not then your credit score will drop

DO NOT open and close credit card accounts

Keep your cards that you have had the longest. The longer the history the better for you credit score


If you need some more info just email me I have been in the mortgage business for the last 5 years


Good tips. And about that last comment - any love for your fellow chiefs brutha? I sent you an e-mail.

KUalum
07-14-2005, 02:09 PM
How much does it hurt your FICO if you transfer a balance?
Granted I haven't seen my report since the last transfer and closing, but I originally had 1 card and it had a fairly big balance. I transferred it, but did not close the acct. Paid off over half in 12 months at 0% and transferred again to finish it off. Have closed the first 0% offer account.
about how many points would this drop your score?

KingPriest2
07-14-2005, 02:09 PM
I won't argue with you, but I will note that if you're not planning on doing anything significant with your credit situation in the mid-term, credit scores aren't wildly significant. In other words, if you plan to live in your house for the next 20 years, and don't plan to buy a car in the next 5, what you do over the next couple years won't necessarily have a big impact on anything.


I was going to note that but I hit the send button to quick.

Hog Farmer
07-14-2005, 02:26 PM
I pulled my credit score yesterday as I am buying another rental property and it showed to be 787. It also showed that I had 21 open revolving accounts. But they all had a Zero balance except one. I called my banker to ask him specifically why my credit score was not perfect and he said :
1) If you have a lot of loans that will affect your score. ( have 15 mortgages with this particular lender)
2) A large number of revolving accounts (credit cards) will lower your score. He suggested just closing the accounts after your done using them.
3) He also said that a perfect score is 840 and he has never seen one.
If you have over 700 then they will would even loan you money to bet the Raiders would win the SB.