You might not need to pay pmi at all. Subprime mortgage don't require
pmi. Even if you are borrowering upto 125% loan to value. Conforming
lenders require pmi until 80 % L.T.V.
cc debt will take you 30 years to pay off. How long has it been since
you had an appraisal done? Loan to value is important to know and so is
your credit score. Subprime rates are based on loan to vaule and credit
scores. And how you pay your bills and how many credit accounts you
have open. You might have enough value with a good enough score to
lower your monthly payments and get rid of some of your debt and light
your burden. We have have done cash out refiancing done to 500 credit
scores. You can use your mortgage to help you as long as the value is
there and the value might increase. I would be glad to help you!

Danette

"John A. Weeks III" <john[at]johnweeks.com> writes:

- quote -

I agree with this. The one additional thing I'd do differently is
take the $100/month now being applied as extra principal on the
mortgage and use it to pay down the highest-interest credit card debt
instead. Once the credit card debt is gone, you can start making more
substantial prepayments on the mortgage and eventually get rid of the
PMI on that. With such a low interest rate on the mortgage, I don't
see much point in trying to pour a lot of money into paying it off
early once the PMI is gone, though; in the long term, you'll get
better returns by investing elsewhere.

-Sandra

In article <f8sef1hd8d65pn8jqe4sjcqacq6tnhk80d[at]4ax.com> ,
"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

You would be insane to cash out your retirement money. For
having such a low income, you have saved a ton of money. It
would be a crime to blow it all now. Roll this money into a
self directed IRA, and invest it in a deversified portfolio.

In reality you are doing pretty well. You will be out of
credit card debt soon. You don't have car payments. Your
mortgage is dirt cheap. Just stick with it, and you will
be home free once that credit card debit is gone. If you
are anxious to make something more happen, consider a 2nd
or weekend job, or your and your S.O. could pick up a few
paper routes. An extra $500 to $1000 a month could really
help you out here.

The only problem you really have is that you bit off a little
more house than you can chew. To really fix your situation,
you would have to sell the house. But given the great loan
you have, and how well real estate is doing, this house will
do well for you over the years if you just keep doing what
you are doing a little while longer.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

The following post was returned to the poster because it was
cross-posted to other newsgroups. Since it involves an on-topic issue
for this newsgroup, it is copied below with corrected headers.

Begin copy----------------

Subject: Yet another 401k/mortgage question
From: "pooky" <pookypookers1[at]yahoo.com
Hello,
I am looking to correct the bad situation of being in debt, which
would include getting rid of mortgage debt. It seems that even if I
eliminated the external debt, that mortgage debt is just as bad and if
I'm going to take the hit of a distribution, I may as been started
knocking down the mortgage as well.

The situation is (approx numbers):
- $140k bi-weekly mortgage with pmi [at] 4.625% with a potential rise to
5.625% if I lose my employment. Last year, pmi cost me $1100. I do
pay $100/mo additional principal.

- $15k in cc debt (although only a 1/3 has an interest applied and the
rest is on-schedule to be paid before the 0% intro runs out)

- no "direct" car payment (car was paid off with a lower interest cc
that is factored in the $15k cc line). We drive an 8yo and 7yo
vehicles, each purchased as used and require minimal maintenance.

- I pay approximately $297/mo in mortgage interest and pmi

- I pay approximately $1500 to the cc bills which incurs $62/mo in
interest ($360/mo total in interest to mortgage, pmi and cc's)

- Last year, my taxable income was $34k, so the distribution would
probably kick me into the next bracket, but I unsure of how much that
effect would be.

- I am in my mid-30's

The problem is that we are cash poor and $360/mo is a lot to be paying
in interest, which is why we are looking to get out as quickly as
possible. We are already bulk buying, buy on-sale online, visit
garage sales and do not eat out, etc. but without the ability to pay
all of the bills with cash and live on cash, we are fighting a losing
battle.

I have recently changed jobs and have approx. $66k in my former 401k
plan. I am trying to figure out what my distribution would be
after-tax, if I took it as a check and or whether or not the hit would
be worth it in the long run.

As I read about the effect of compound interest and average rate of
return on an investment, the "expected" calculation rate seems to be
between 8-10%. However, with the major corporate legal issues (who
doesn't have their executives on trial right now???), and other
uncertainties in the market, I have a great deal of uneasiness with
expecting that rate in the future.

It seems that my investment options by rolling the 401k would be to
hope for a 10% (let's use this for argument's sake) return over the
next 30 years, minus taxes at withdrawal of around 15%, which would
reduce my actual take to 8.5-9%. Or, I could invest in lower risk
options other than equities and take a lower rate of return.

Alternatively, I could take the $66k, minus the 10% penalty tax
($6,600) and what my regular estimated tax rate would be ~30% (I think
this would be a fair value and would cost ~$19.8k), this would leave
me approx. $39,600 (66-19.8-6.6 = $39,600).

What would I do with that money?

- pay off all cc and cut them up
- Pay off enough of the mortgage to eliminate pmi (roughly $17k
needed, although this may be less as our property has appreciated
since it was bought)
- any money leftover would go to: 2005 Roth, emergency fund

The $4300/yr not tied up in interest and pmi, plus the $1500/month not
going to cc's (~1800/mo total) would go toward rebuilding retirement,
a better budget, house repairs, child savings and paying off my
mortgage early. I am also looking at low-startup cost businesses.
This, I believe, would give a guaranteed, tax-free 4.625% return on
pre-paid mortgage dollars, eliminate the pmi and cc interest and
significantly dent my mortgage interest without the risk of the
investment options.

I would also reduce the effect of the higher interest rate in the
event that something did happen to my job. I would continue to
contribute to my current company's 401k for the matched max, as I
don't want to abandon that benefit. I have thought about stopping
this and applying this money to the debt, but it is such a small
amount that it doesn't seem logical when you factor in the tax
deduction.

The debt-free campaigns talk about eliminating your highest-interest
debt and accelerating your payments as bills are paid off. By taking
the distribution, I would essentially do that immediately, with all of
my "free" cash going to pay off the house. While I know that I would
be forfeiting something down the line it seems that consolidation
loans and other types of "tools" only seem to change the parameters,
but not the debt.

Is there anything I have not factored into the equation of taking the
distribution (other penalties, etc.) ?

Are there other tools should I consider (moving is not an option, as
the lawyer fees, etc., would eat much more than the 10% tax penalty of
the distribution)?

Any other advice would be appreciated.

Thank you.

End copy------------------------------



-HW "Skip" Weldon
Columbia, SC