Peter Hentges (jbru) wrote,
Peter Hentges

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The mortgage tango

I've had recent money difficulties, falling behind on bills and having things stretched tight. It finally came to a head last week with the city threatening to turn the water off and a close call that left $.90 in my checking account. So I took action. My biggest bill each month is, of course, my mortgage. If I could cut some expense off the top of that, getting the rest of the bills paid would be far easier.

When last I tried this, calling into the national center for my mortgage company (Wells Fargo) ended up in a run-around that cost me missing two months of mortgage payments. By the time we figured out that I wouldn't be able to get anything done with them, my credit was so bad (because of those missed payments) that I wasn't able to get my mortgage refinanced with anyone else.

So today I went in and talked to a loan guy at an actual branch of Wells Fargo. We figured out in about 20 minutes that he wasn't going to be able to help me. What we could do, however, was have his associate write me a "sub-prime" loan. This is at a much worse interest rate than what is typical for people with good credit these days (9.5%) but is much looser in terms of who they can loan to and how much they can provide.

So what we're looking at doing is pulling all my debt together into one loan. Using cash out of the mortgage to pay off my home equity line of credit, my credit cards and even my student loan. All of this will end up with my mortgage payment being about $300 more per month than it is now, but will save me nearly $600 overall by sucking up the payments on the other loans I have.

So the plan is to stick with this loan for the required two years (opting out early results in a penalty) and work on getting my credit back into repair. With a couple of extra hundred dollars a month, that should be fairly easy. If I work at it a bit, I hope to even build up some significant savings. So, financial goals for the upcoming two years:
  • Make all my mortgage payments on time.
  • Make 90% of my utility bill payments on time.
  • Build up savings equal to at least one mortgage payment (ideally more).
  • Keep credit card debt at less than 20% of my available limits.

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