I recently read this asinine article on MSN (byline Bankrate.com). The headline on the MSN main page, "How to refinance when bank says 'no'", caught my eye. The actual article was titled: Want to refinance but can't? 3 tips.
I thought, "Could there really be a way to get a refi on an underwater mortgage? I have to check this out!"
Um, not so much...
Here are the three tips:
Tip Number One:
Problem: Inadequate or negative equity (oo oo, that's me! *breathless* What can I do?)
Solution: Reduce principal (but how, by magic?)
The article advises: "A lump sum can be applied from a savings or retirement account, sale of another asset, income tax refund or bonus." (No s#!t, why didn't I think of that? *slaps forehead* Hey, Bankrate, if I'd had an extra $200,000 lying around don't you think I would have used the money to pay off my second mortgage!?) NOTE: $200,000 is what I'd need to get to 80% LTV in the current market.
Tip Number Two:
Problem: Inadequate income or excessive debt (not me, but a problem for a lot of people)
Solution: Earn more, pay off debt
The article advises: The most obvious solution to a troublesome DTI (debt to income ratio) is to earn more income through a better-paying job, pay raise or second job. (In these troubled economic times, with rising unemployment, I'll just step out and get a better job. I should be a CEO, I'll start applying on Monday.)
Tip Number Three:
Problem: Credit score is too low
Solution: Pay bills on time (That works? I never knew!)
If those tips are new to anybody it is no wonder they are in trouble. Sorry for the rant, but I am tired of all the lowest common denominator type news stories. How about some useful tips and information? There's much better information in the PF blogs than in the news.
Hurricane aftermath in a mountain forest
4 hours ago
Yeah, where do I get the job writing those tips! I supposedly need $150,000 to refi. I'm 32, where the heck would I have that kind of money. What do you think about this $15k tax credit to buy a home? I want a new primary home but they are still over $400k in the areas we would want and you would think the credit would serve to prop up prices - making it unattainable. I can't sell this place so I'd have to rent it out, for less than I owe each month...
ReplyDelete@Miss M - The current tax credit is for first time buyers (includes those who have not owned a home in 3 years) only and has to be repaid over several years or out of the profits of a sale if the home is sold before the credit is paid back. I think if I qualified I would take the money and apply it to my principal, saving me some money in interest.
ReplyDeleteI think the purpose of the credit is to get people off the fence who could buy but are afraid to because prices keep dropping. If people started buying prices would stop dropping. Plus, if people got a bunch of money they'd probably spend it on new appliances or something, not put it towards principal. The Gov is no doubt hoping people will spend the $$.
LOL... your sarcasm is making me LOL. It's true - these articles are so maddening. Why didn't I think of just solving our financial problems by asking for a raise? Or getting a better-paying job? What a slacker my husband is, taking his current job and passing up the CEO opportunity because he didn't know it would help us out of this situation. Duh!
ReplyDeleteI was referring to the proposed credit/rebate in the new stimulus bill, not limited to first time buyers, doesn't have to be paid back and $15k.
ReplyDeleteDo you mean this:
ReplyDelete"Home-buyer credit: The Senate bill would double the size of an existing temporary home-buyer credit to $15,000. It would also allow all homebuyers to claim it and remove the requirement under current law that the credit be paid back. The House bill also removes the repayment requirement but leaves the credit maximum at $7,500 and would offer it only to first-time buyers."
I think the goal is to keep prices from dropping more as well as to get people off the fence about buying. If prices keep dropping people will wait and try to time the bottom, also people who are underwater won't be able to refi.
I can see that getting the market stabilized is a good thing, but I am still a teeth-gnashing green-eyed monster of jealousy that people are going to get good deals and have lots of free money while I have to sit in my corner and suck eggs.
Earn more, pay off debt
ReplyDeleteWow. This kind of stuff always makes me imagine what the writer and editor must have said to each other. Maybe the writer came up with a great article with all kinds of great advice and the editor threw it back on her desk. "Make it more simple. People don't want all the confusing details. They just want simple!"
Unfortunately, the editor was wrong.