Posted on: 31st Dec, 2010 01:24 pm
i have an adjustible mortgage that will start to reset in a year and a half. i bought my condo in 2005 when the market was high. the condo i bought was four hundred thousand dollars. i put two hundred thousand dollars down. now the condo is worth about two hundred thirty thousand dollars. i can not refinance because of my income. i do work two jobs and two side jobs. i am divorced. when the mortagage starts to readjust i want to cash in my retirement accounts and pay it off or try and wait for three more years when i am fifty-nine and a half to avoid the penalty. i don't see any other option. i know i will have to pay taxes on the retirement accounts. one is a roth one is an ira. i will only have a small amount of retirement money left. any other ideas? thanks.
Not sure what market you're in, but take your 30k in equity and move up and sell the condo?
A 400k condo at the peak of the market 5 years ago, you can now get a SFR for a steal right now, probably less that what you bought the condo for.
But if you can't qual on 200k with your income it might be tough. Maybe restructure your debts and show lower monthly payments on paper you might be able to make it work.
Get a copy of your credit report, and email me at "jhall@myezcreditrepair.com". I can go through your debts and see what we have to work with.
I've structured mortgage financing for 15 years, where there's a will there's a way.
[Email address deactivated as per forum rules. Thanks.]
A 400k condo at the peak of the market 5 years ago, you can now get a SFR for a steal right now, probably less that what you bought the condo for.
But if you can't qual on 200k with your income it might be tough. Maybe restructure your debts and show lower monthly payments on paper you might be able to make it work.
Get a copy of your credit report, and email me at "jhall@myezcreditrepair.com". I can go through your debts and see what we have to work with.
I've structured mortgage financing for 15 years, where there's a will there's a way.
[Email address deactivated as per forum rules. Thanks.]
Sorry, I forgot to login.
I posted above.
I posted above.
Hi Diana!
Welcome to forums!
It will be better if you could wait for 3 more years and then cash in your retirement account. This will help you in avoiding the 10% penalty that you'll have to pay otherwise.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
It will be better if you could wait for 3 more years and then cash in your retirement account. This will help you in avoiding the 10% penalty that you'll have to pay otherwise.
Feel free to ask if you've further queries.
Sussane
Thanks for your answers. I do not have any credit card dept or car loans, just the usual monthly expenses. My credit score is 780. I just can't refinance because of my income. I do work over forty hours a week. I live in Southern California and did not take the time to truly become informed about adjustible mortgages. I naively thought I could sell or refinance within my seven year window. If I sold I would lose almost two hundred thousand dollars. I also think I should try and hold out for three years and cash in retirement if I can not afford whatever the new payments may be.
Welcome Diana,
If you cannot prove a proper employment, the lender will not be ready to give you a mortgage. In that case, it will be a better option to wait for three years and then cash in your retirement.
If you cannot prove a proper employment, the lender will not be ready to give you a mortgage. In that case, it will be a better option to wait for three years and then cash in your retirement.
Hi Diana,
Please don't cash out that retirement. I understand the concern about the ARM.
I definitely think cashing out the IRAs now would be bad. That 10% on $200k is $20k. Your loan may adjust a lot in 2012, but your interest rate has a cap on it. The max that it could cost you would be either $4k or $10k depending on your loan terms. Either way, it's only in worst-case that it costs that much and the $20k would be gone forever.
For now, why are you saying that your income won't qualify? Is it that you don't have a history of income or is it that the hourly isn't high enough. If your income is carrying the payment now, it just sounds like you should qualify at today's low rates if you have no other debt on your credit report.
Please don't cash out that retirement. I understand the concern about the ARM.
I definitely think cashing out the IRAs now would be bad. That 10% on $200k is $20k. Your loan may adjust a lot in 2012, but your interest rate has a cap on it. The max that it could cost you would be either $4k or $10k depending on your loan terms. Either way, it's only in worst-case that it costs that much and the $20k would be gone forever.
For now, why are you saying that your income won't qualify? Is it that you don't have a history of income or is it that the hourly isn't high enough. If your income is carrying the payment now, it just sounds like you should qualify at today's low rates if you have no other debt on your credit report.
I just had Fivefin's problem...my post is above.
When the mortgage rate starts to adjust in 1.5 years, do not pay off the entire loan amount as you say that leaves you only a small retirement balance.
Only pay down enough of the balance to be afordable for whatever your income is.
Pay down the balance about 60 days before the interest rate adjustnment date. That way the new payment will be based not only on the new rate, but, the new lower balance as well.
You should be able to get a good idea about 60 days before adjustment date as to what the new rate will be (sum of the index plus margin). While that is months from now, you may find the payment rate will drop if the index stays low.
Only pay down enough of the balance to be afordable for whatever your income is.
Pay down the balance about 60 days before the interest rate adjustnment date. That way the new payment will be based not only on the new rate, but, the new lower balance as well.
You should be able to get a good idea about 60 days before adjustment date as to what the new rate will be (sum of the index plus margin). While that is months from now, you may find the payment rate will drop if the index stays low.
I fail to see how paying down any portion of that loan in 1.5 years is a good long-term move.
$1k in loan amount reduction equals roughly $5-6/month. So for each $1k you pay down, you save $60-72/year, but pay $100 in early withdrawal penalties.
$1k in loan amount reduction equals roughly $5-6/month. So for each $1k you pay down, you save $60-72/year, but pay $100 in early withdrawal penalties.
Thanks so much for your replies. I did try in the last couple weeks to refinance and I can't. I just don't make enough money.I am an aide in a special ed. classroom. I even found out my credit score is 801, but I was told I would need to bring about a hundred thousand dollars more to the table to refinance. Pretty weird, I have been living on this income for the last six years and have never been late on any payment. I was told I couldn't even try and modify my mortgage since I have money in the bank. I would just like the rate I have (5.8) to be fixed, not adjustible. I guess I am a lot better off than so many people because I do have a job, health benefits and some cash. I also live within my means. I guess I will see what happens and try not to cash in the retirement account unless it is absolutely necessary.
My wife has same job you do, in New Jersey.
It is certainly best not to cash in or borrow from retirement savings, however, if it becomes necessary, it is an option.
While it is noted above there are penalties, the penalties are one time. The lower payments on the existing mortgage if paid down are forever.
Still, only do it if you must.
Best wishes.
It is certainly best not to cash in or borrow from retirement savings, however, if it becomes necessary, it is an option.
While it is noted above there are penalties, the penalties are one time. The lower payments on the existing mortgage if paid down are forever.
Still, only do it if you must.
Best wishes.