What would you do?

[RN009]

I bought my house in 04 in CA as a primary resident with no 0% down so I had to pay for PMI. Few months later I refinanced it to get a lower rate and to get rid of PMI. The second mortgage was already paid of. Now it is worth less than half and the neighborhood is deteriorating. I am going to foreclosure it and stop making payment in Nov.

I have about 27k in saving with two depts: student loan and car loan. They both are total of 26k. I want to move the cash to avoid the bank looking at my assets. The question is should I pay off those two before start foreclosing (no need to worry about moving the cash) or with draw the cash and pay them later after foreclosing (the credit score will be trashed) to get credit score back quicker?

My mortgage lender is HSBC and the saving is in BoA if that matters.

Thanks for any advices.

[booggs28]

Originally Posted by RN009

I bought my house in 04 in CA as a primary resident with no 0% down so I had to pay for PMI. Few months later I refinanced it to get a lower rate and to get rid of PMI. The second mortgage was already paid of. Now it is worth less than half and the neighborhood is deteriorating. I am going to foreclosure it and stop making payment in Nov.

I have about 27k in saving with two depts: student loan and car loan. They both are total of 26k. I want to move the cash to avoid the bank looking at my assets. The question is should I pay off those two before start foreclosing (no need to worry about moving the cash) or with draw the cash and pay them later after foreclosing (the credit score will be trashed) to get credit score back quicker?

My mortgage lender is HSBC and the saving is in BoA if that matters.

Thanks for any advices.

Welcome: If it were me: I'd pay off the two outstanding debts if that was all I had and be done with them - since you are going to walk away and depending on what the state laws and time lines are for foreclosure, the money that you would have paid on mortgage you can now save up until you have to move.

You have an opportunity to become "debt free" I myself would take it. In regards to your FICO, well it's gonna tank and the foreclosure will likely be there for the next 7 years - it is what it is - take this opportunity to clean the slate and start over and avoid debt as much as you can and save, save, save.

Best of luck
Booggs28

[outta_here]

Hi RN009 - I agree with booggs28 that paying down your loans and becoming debt free is probably the best thing to do. There aren't many times in life where you get that kind of opportunity. I would add that if you are banking with BofA right now and they are your mortgage holder, change banks ASAP!

[RN009]

Thanks guys.

I also wanted to pay off these depts a while ago but my wife has asked me to hold off for emrergency uses. But with this situation, I think it is the time.

My mortgage lender is HSBC, not BoA. However, I am thinking to switch to Credit Union. Am I worry too much?

[booggs28]

Originally Posted by RN009

Thanks guys.

I also wanted to pay off these depts a while ago but my wife has asked me to hold off for emrergency uses. But with this situation, I think it is the time.

My mortgage lender is HSBC, not BoA. However, I am thinking to switch to Credit Union. Am I worry too much?

RN: understand where your wife is coming from, however, I think in this day and age, this is an emergency time and clearing that debt will only free you and your family in the years to come. You will be able to take the money that you would have been paying in mortgage and setting a percentage of it aside to build a new savings for you and your family.

I think that your idea of taking your business to a local credit union is a good one as they are typically community based and owned by their members. Bank of America is not for America, but for themselves and their own interest. Taking that money of yours away from them and investing in a credit union is just one more step in ending their reign.

Best wishes,
Teresa

[darlyj]

I would have to agree with the others here. A local credit union will be far more likely to have your best interests at heart than a large corporation...and you will be supporting a local business to boot. Personally, I would pay off the rest of the debt and save whatever you possibly can for moving expenses, etc. However I do also understand the concern for having funds available to cover emergencies....maybe you could pay off the higher interest debt and hold off paying the other until after you get settled in a new place. You might consider a good safe for safe-keeping of any other funds above and beyond bills too. You will need to use your social in order to open a new bank account, and it can be tracked. Good luck to you!

[auroraproblem]

I would not count on a credit union to be better. In fact they are usually worse than a normal bank. Our lawyer recommended that we switch out of ours and read the fine print in the contract. After reading it, I was rather shocked. Look at the part about costing them money, they are the first entity to reach into your account for payment if you cost them anything and if you bankrupt and cost another credit union money they can and are likely to close your accounts in support of the other credit union (though they can not reach into the account for payment in those cases).

We have now moved back to a bank. Not like it would be any better, though perhaps a small local bank would be the best choice.