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Any financial advisers here?

We recently applied to refinance our mortgage. During the process my husband got laid off so we were denigned.

I made $110k /year. My credit score is 800+. Our mortgage is 500k and my house is valued at 1 million. My questions are,

1. Shouldn't I be able to quality for the mortgage on my own merit without my husbands income?

2. They came back to us and offered us a 7 year arm at a very low interest rate. My gut says 'hell no I'm not risking my house to a variable interest rate when I'm locked in at 6.2%".

3. we owe 3k on property taxes that could be rolled into the 7 year arm but I would rather pay for them on our rainy day fund. My husband says everything he's heard about being unemployed is to hang on to your cash.

So, should I pay my property tax bill with my rainy day fund and keep my 6.2% 30 year fixed mortgage? Or, should I go with the 7 year arm of 4.6% roll in our tax bill drastically reducing our monthly bill for now, hoping my husband gets a job and refinance after he does?

 
Anonymous

Asked by Anonymous at 2:39 AM on Jun. 19, 2011 in Money & Work

This question is closed.
Answers (8)
  • I am a financial coach, DO NOT TAKE ARM, you may still have time to pay the taxes in 2 payments. All of your bills added up has to be less than 40% of you income. Even though you make $110K you cannot qualify for that much mortgage. Most sites have a mortgage calculator that shows you how much you qualify for.

    I do offer a free Financial Needs Analysis and maybe your husband could check out a part time with us. In box me if you are interested.
    Fabe21

    Answer by Fabe21 at 10:36 PM on Jun. 21, 2011

  • I'm not a financial adviser and not going to say I know a whole lot about this, but my dad is good with money and is very knowledgeable about real estate matters (was his job for awhile actually) and when DH and I were considering buying a house he told me to avoid an ARM at all costs. I'd go with your gut on that one for sure!
    Anonymous

    Answer by Anonymous at 2:54 AM on Jun. 19, 2011

  • I'm not a financial adviser but I play one on TV :)
    YES, pay off the property bill! That is risking losing your house. Are you on a payment plan? If so, perhaps hold on to the cash.

    You make 100k but want a loan for 5 times that, that is why you are not being approved. You could probably get a loan for $250k max. (or 2.5% of your annual salary)

    Sorry, but it's just not a good time for you right now. I would get your DH a job ASAP, because a salary of 100k, a huge hunk must be going to your 500k mortgage. Time to cut the budget drastically.

    Candi1024

    Answer by Candi1024 at 6:26 AM on Jun. 19, 2011

  • I'm w/Candi1024 on this one ...

    Yes, at a salary of $110/year and a credit score of 800+, you should qualify for a mortgage BUT not for one that big in today's economy. And the $1 million value of the house has no bearing on that.

    NEVER go for an ARM and DO pay your real estate taxes ASAP. Your DH needs to step up and find some work, and it sounds like overall, you need to reduce your budget drastically. Scrutinize your expenses and write them all down (you can trim the fat once you actually see where it is) and find ways to cut back. Make a budget and stick to it. Good luck.

    Anonymous

    Answer by Anonymous at 7:25 AM on Jun. 19, 2011

  • Have your ever heard of or known anyone personally that has benefited from an ARM?
    meooma

    Answer by meooma at 9:10 AM on Jun. 19, 2011

  • Not a financial adviser- but I am working on becoming one-

    I agree with Candi. Now is probably not a good time to refinance- and for sure DON'T get an ARM. Pay your taxes- you don't want to lose your home over something like that.

    My thought is you might have to sell your home if your husband doesn't get a job soon. Now is not the time to refinance. Yes I know rates are going back up, but for now you guys are just going to have to make sure your family stays a float. To hold onto as much money as you can. But keep in mind that normal every day bills should be paid, or canceled and that includes past tax bills.

    Make a prioritized budget- food, mortgage, utilities at the top. On the bottom you'd have things like eating out, entertainment, cable, stuff like that. If you don't make enough- those things don't happen. But for sure your basic necessities are taken care of.

    Good luck!
    Erica_Smerica

    Answer by Erica_Smerica at 10:52 AM on Jun. 19, 2011

  • Do not get the adjustable, unless you plan to get a new mortgage long before the adjustment kicks in.

    rkoloms

    Answer by rkoloms at 12:53 PM on Jun. 19, 2011

  • Definitly pay your taxes, the last thing you want to do is lose your house, because you didn't pay your taxes. But I would not include it in any home loan of any type, beacuse you would by paying interest on it for XX number of years. The ARM, not sure if I am right on this one, but if I understand right, a 7/1 ARM would mean your interest rate does not change for 7 years, then it will change once a year there after based on Prime +. If that is the way it works, I would take the 7/1 ARM, it would reduce your monthly payments, and allow you to get your finances back in order, and then when the time is right, I would refinance with a fixed rate.
    tcskids

    Answer by tcskids at 10:39 AM on Jun. 20, 2011

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