Author Topic: Refinancing with a 50/50 mortgage?  (Read 2268 times)

Offline Coopedupky

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Refinancing with a 50/50 mortgage?
« on: November 13, 2013, 12:42:24 PM »
I haven't been on here much. Forums are kind of new to me, not sure about navigation and such.
I hope to find some advise for my.... compound situation.

I am about to hit the point in my mortgage where I have 50% equity. I want to refinance to lower payments, make repairs, etc.
We are 7 strong in my house. My SO, 5 kids ranging from 1yr-16yr. I have water for 72 hrs. I have food for about a month.

Financially I am in a very difficult spot.
I have no significant amount of savings. some cash, some silver. My SO's income is enough to pay her bills and our utilities.
My income pays for the house and that's about it. My full time job the main bread winner at 40,000 yr.
I have a summer business mowing lawns, which has done well for the time I have available, which may expand greatly very soon.
I am going back to work tomorrow on permanent labor restrictions, which will most likely end in my unemployment.
I have 3 herniated disks and may need surgery. It is not a workers comp deal. If let go I have a 401k to collect at 5% match for the past 9 yrs.
She has several debts that I am pushing her to snowball. I only have the house and med bills.
Should I refinance? I was on a path to hopefully quitting my full time job by summer next year, but my back has put a kink in my plans

Offline fred.greek

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Re: Refinancing with a 50/50 mortgage?
« Reply #1 on: November 13, 2013, 07:25:14 PM »
If you have large medical bills not covered by insurance, check into the bankruptcy exemptions for your state…  what do you get to keep if you file to make the medical debt go away.  (Especially if you are about to lose income)

In example, in Arizona you keep up to $150,000 of equity in your home…
http://www.legalconsumer.com/bankruptcy/laws/

To refinance to lower payments, you probably need to do so before you lose employment or file bankruptcy…

Re bad discs, depending on your personal facts, have you considered chiropractic or other non-surgical means of dealing with the discs?  (i.e. an inversion table) I've had lots of people who had disc surgery & spine fusion tell me that it still hurt, and with the fusion they lost range of motion.  I've also got 3 bad discs, told almost 20 years ago I needed surgery…  hanging "upside down" every now and then works a miracle for me… (Talk to your surgeon(s)).

Re the 401k, I gather you just mean that if let go, you can cash out, or roll out your 401k. Unless you absolutely need the money for an expense that cannot be bankrupted debt, I would not cash out.  I would roll to an IRA type account… depending on how much is there, to a custodian that would work with you to buy real estate…  when I retired my 401k type account was rolled out to a real estate IRA type account, which bought a small rental. 

Offline chrisdfw

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Re: Refinancing with a 50/50 mortgage?
« Reply #2 on: November 13, 2013, 08:06:46 PM »
^ These things are all good advice.

If you have bills you just will not be able to pay, bankruptcy is a better choice than cashing out the 401k, since 401k's are nearly always exempt.

Just talking to a bankruptcy lawyer is a good thing. It doesn't mean you have to file, but really understanding your options may save you a lot of grief in the future.

Refinance now if that is something you want to do. But either way, bankruptcy will not make your income go up, you will need to find another job, or source of income. In the mean time, we have been paying taxes all our lives, so if there is an assistance program out there from the government that you are eligible, consider it a refund of past taxes stolen from your check and take it. Don't make it a lifestyle, but I would not hesitate to get back a little bit of the money they raped my paycheck for. I know food stamps no longer counts home equity and 401k plans as assets, so you might be able to get it for the time you are looking for another income, waiting for disability, getting your job going, etc.

Without a lot more information I can't give more solid advice, and I would not post any detailed information on an internet forum. Feel free to send a pm if you want to discuss more.

Offline Prodigy

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Re: Refinancing with a 50/50 mortgage?
« Reply #3 on: November 14, 2013, 11:39:51 AM »
I think this is a potentially easy answer, and is the same for most people in most situations:

Shop around, and do the exact math on what it will cost you for the closing costs/etc.  Then do the math on how much money per month that you can save.  Figure out how long it will take to make up the refinance costs, and if you can go without that cash for that amount of time - refinance!  If you'll need that cash before then, you may have to wait.

IE:  If it's going to cost $1000 on refinancing fees, and you'll be saving $200 a month - that's only 5 months before you break even, and from that point on it's extra money in your pocket.  This example is roughly my case when I refinanced earlier this year.

Offline Oxymoron02

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Re: Refinancing with a 50/50 mortgage?
« Reply #4 on: November 22, 2013, 10:37:10 AM »
Like Prodigy said, I'd do the math on the refi.  I don't know what your current interest rate is, and while avoiding increasing interest would be high on my priority list, with the situation you've detailed I might be willing to take a hit on the interest rate if it meant lower payments and keeping my house.  Also, are you paying PMI right now?  If you refi, you might get out of it.  Every little bit helps.

I live in a tenancy by the entirety state.  I have "marital interest" in the house (bought before we married), and, if we ever get around to it, deeding our home tenancy by the entireties would protect it from individual debts.  My husband knows he's bad with money, and I'd be lying if I didn't say he and I both considered legally protecting him from himself as a major point when we decided to get married.  I would look into property rights of married people in your area, and consider getting married.  If you don't want to, don't, but I would look into the benefits of doing so.  Then look into pre-nups.  :)