Rolling over debt into a future mortgage

**disneysteve** · 01-26-2008, 01:30 PM

What has she been smoking?

This lady sounds nuts. I wonder if her money management had anything to do with her recent divorce. Wouldn't surprise me. She traded in a 2006 SUV to buy a 2007. She's borrowing repeatedly from her 401K. She has debt equal to 83% of her gross income and thinks she can buy a house and borrow more than 100% of the purchase price.

It doesn't sound like this woman is someone you can reason with. I'd probably stay out of the money conversations with her.

**project15** · 01-26-2008, 02:50 PM

she said to me the other day "You're good with money, do you think you can help me?" I told her I could help her with a budget, but I doubt she would stick to it for even one day.

**disneysteve** · 01-26-2008, 02:55 PM

Well, if she came looking for help then I'd do my best to explain where she has gone wrong and to make it clear why she can't do what she is proposing.

**Aleta** · 01-26-2008, 02:59 PM

Good advice Steve. It's easier to help someone when they've asked for help and are more receptive to your ideas. Do what you can for her, but explain that there are no easy fixes in this.

**Scanner** · 01-26-2008, 04:45 PM

I'd start by telling her that banks aren't stupid any more in this market and aren't going to "overappraise" a house.

A few billion dollars in losses have taught them a lesson that pros shouldn't have had to have learned.

A few years ago. . .yes. . .banks were stupid.

But not now.

**jodi** · 01-26-2008, 05:31 PM

As a real estate agent, I've never seen a bank lend out more than the purchase price except in rehab-type loans - and even then, they only hand out the money as the rehab work is being done (no blank checks here). So, no, the bank is not going to go along with this. I'd be surprised if she could even get a bank to lend her the cash in this climate, given her high debt load and history (my understanding is that debt-consolidation plans are a black mark on your credit).

**poundwise** · 01-26-2008, 05:37 PM

The last thing this lady needs is another loan.

**disneysteve** · 01-26-2008, 05:41 PM

Originally posted by poundwise View Post

The last thing this lady needs is another loan.

Agreed. You can't borrow your way out of debt.

**project15** · 01-27-2008, 03:37 AM

Thanks guys for reinforcing my understanding. I'll try to let her know that it's probably not possible. She may just need to go to a few banks and be rejected in order to understand. I don't think being rejected by just one bank will stop her mission.

**jIM_Ohio** · 01-27-2008, 09:12 AM

She's in a hole, and is digging it deeper.

I want to know what she is smoking, if there is any left, and if I can get a free sample.

**project15** · 01-27-2008, 01:14 PM

Originally posted by jIM_Ohio View Post

She's in a hole, and is digging it deeper.

I want to know what she is smoking, if there is any left, and if I can get a free sample.

She also smokes cigs :-D what a waste of money.

**disneysteve** · 01-27-2008, 02:28 PM

Originally posted by project15 View Post

She also smokes cigs :-D what a waste of money.

That isn't the kind of smoking Jim and I were referring to.

I see so many people where I work who really struggle financially but are nicotine addicts. Their lives would be so much easier if they weren't blowing $6/day on cigarettes. I know it isn't easy to quit, but doing so could really turn their lives around. An extra $180/month could do wonders.

Unfortunately, smoking, drinking and other drug abuse, as well as gambling, are much more prevalent among the poor who can least afford it.

Rolling over debt into a future mortgage