Loans Answers

Debt Repayment Advice part 2

Question: Once again thanks for all the replies to my orginal post. However, several of you mentioned getting a personal loan to consolidate the bills. I ask out of curiosity, with the credit couseling service on my credit report how is it possible to get a personal loan to pay off those accounts?

Another question that does concern me is the home equity loan. We are planning on selling our house in 2 years to move to a better education area for our child when he begins school. It will be 2 years in September since we purchased our home. Since I am not familiar with home equity loans, is the home equity loan seperate from the mortgage. I know they put a lean on the home, will this lean be removed when the loan is paid in full? Will this have any affect on us selling our home if the loan is paid in full by the time we sell?

I am beginning to think that a home equity loan is a good idea due to the interest rates and since we will be paying $460 dollars a month we will also recover another $40 a month from the credit counseling service. This will effectively add to total debt reduction two fold, reduced interest rate and additional monthly funds to pay the debt.

We are not reducing the payment at all until all debt is repayed. We have this budgeted at this time and it will stay there. At the above estimated calculations we could almost reduce this debt in half in about 10 to 11 months. With our current situation we may reduce it 20% in the same time frame.

With our credit counseling and lower credit score do you even think it is possible to get a home equity loan?

Suggestions? Oh yeah I forgot about closing cost but it shouldn’t be too bad.

Answer: A home equity lone is like another mortgage. But it is an additional loan separate from your first mortgage. The equity in your house is the difference between what the house is worth and what you still owe on your firts mortgage. Check your monthly mortgage statement for that amount.

When it comes time to sell your house all liens (not leans) have to be satisfied (paid). That includes your first mortgage and your home equity loan. The lien should be removed when the loan is paid. But some lenders are lazy about this. As a Realtor we have to check for things like this on a title report. There have been a couple of times that the seller had to contact an old Home Equity lender to get an old lien removed.

If the loan is paid and the lien is removed it is as if it never happened. As far as a buyer is concerned. Althought it will show up on your credit report (for good or for bad depending on how you handled it).

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Filed under: Home Equity Loan