“Using the Home You Inherited as a Credit Card”

The home has an estimated value of $180,000 and the two existing mortgages total $101,000, plus she has $80,000 in credit card debt and a $16,000 car loan. She was referred by a bankruptcy attorney as she wanted to file her credit card debt into a bankruptcy, but she makes too much money to file. How crazy is that?

The ONLY way to solve part of her problem was to refinance and pay off as much credit card debt as possible. To get the maximum amount to pay off the most debt was to do an FHA mortgage. By the time we were done, we saved her $688 per month. I hate the idea of paying off credit card debt with the equity in a home, but there just was not an option.

I told her that I would do the mortgage on one condition. The condition was to allow me to introduce her to a referral partner of mine. She is a “Financial Organizer” and a very good one, which she agreed to meet with her to set up a strict budget. This financial organizer reminds me of an army drill Sargent, but I am not convinced my client will follow through.  

Most in the mortgage business run into situations like this from time to time and sure we all struggle each time a loan like this is done.