wait a second here!


you wrote that you barely get by now - living paycheck to paycheck and that you wont be working after august (for now)

but you have 2 car loans? id get rid of those - meaning get rid of those cars and buy a cheap car to get you over this hump.

because you are paycheck to paycheck and are barely getting by, the last thing i would do is take on another loan and still continue car payments!

We are looking into a newer type of home loan, I'm not sure if it's available in all states or not (in Idaho it's called Home Ownership Accelerator). I'm not sure of the exact details, we have an appointment on Thursday to learn more; but your house gets paid off in half the time and you have access to your equity:

"With this new mortgage you deposit your payroll directly into the mortgage, dramatically driving down your principal balance. You pay all of your expenses out of the mortgage using the unlimited checks, ATM card and online bill-pay that comes with the account. While you’re not using your money, it’s keeping your loan balance lower, saving you 5-6% in interest, instead of earning only 1-2% or less in the bank! Since less of your income is going towards interest, it leaves more money for principal, and you pay down faster – with no change to your spending habits!"

It's definately worth looking into for anyone considering a home equity loan or re-finance.

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And keep in mind, not all the interest in a home equity loan (or line of credit) is tax deductible if you don't use that money to improve your home. The percentage of the home equity loan or line of credit used to pay off your student loans or car isn't deductible. Trust me, this results in a tax nightmare which doesn't go away until you pay off the mortgage. Even if you re-fi later and roll all your mortgage debt into a single mortgage, you still are supposed to account for that non-mortgage percentage of the debt. Yeah I know, most people lie about this IRS requirement but do your really want to have that hanging over your head?

I absolutely agree that your student loans should NOT be rolled into your mortgage.

I'm not in favor of rolling in your auto loans either. If anything, you should decide what you're going to do about those debts, especially as someone else pointed out, because you're living paycheck to paycheck.

As for extending your mortgage payments out again, that might be a good idea. Re-fi'ing and taking out some money for the windows and furnace, plus going for a longer term on your mortgage may give you some much needed financial breathing room. Check into different interest rates for a primary mortgage vs a home equity line of credit. You may find that re-fi on your first mortgage is a better deal.

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Actually, the way IRS Publication 936 reads you CAN deduct the interest on a HELOC or second mortgage regardless of what you spend the $ on. I think the limitations have to do with how much $ in interest you can actually write off.

WE came into this as well a few years ago when we took out our HE loan as well. The way we looked at it, was the student loans has SUCH a low interest rate, that would be silly to roll them inot a higher rate HE loan. And the car only had a 5 year loan, if we rolled it into a HE loan, we would be paying on it for 15 years. NOT worth it!! And now, one of the student loans is due to be paid off this summer, and the car only has 3 years of payments left on it. Definatly a good move on our part.

And we got suckered in with the adjustable rate too. When we took the loan out, it was like 7%, but then it adjusted after 3 years and its 13.75%!!!!!! I'm actually trying to find someone to refinance that loan right now for a lower rate.

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Meghan8.Samantha7,Cameron4

Nay- I think end the end you are going to bury yourself so far, you'll never be able to dig yourselves out. IMHO.

I'd say Nay. Another problem with having no equity left in your home (among other things) is that if you do end up moving before your home increases in value, or if you have to sell at a loss, you'll need to PAY OUT to move. That's money you don't have. You're stuck in your own home. Too often people assume that home values always go up or that home fix-ups always result in equally proportionate added value, which isn't always the case. You don't want to end up with $200,000 in mortgages/HE loans on a $180,000 house, for example. You'd end up having to pay $20,000 out of pocket to move, plus realtor fees.

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