Friday, November 5, 2010

A Change of Plans..

It's been awhile since I last posted. Being pregnant, preparing to sell your home, and trying to get things "perfect" before the arrival of our daughter is very emotionally and physically tolling.

The house is finished with the exception of handrails on the deck and new kitchen cabinets. But the credit cards are maxed, and we have run out of time and money. A couple weeks ago I approached David with the idea of keeping house and refinancing to take advantage of all the equity we have built by fixing her up. We owe about $115,000 on the house, and believe it is worth between $170,000 and $180,000. I was hoping then, we could get a loan for enough to pay off the $25,000 in credit card debt that we accumulated making repairs.

It hasn't been as easy as I had hoped. Right now banks will give you a loan for about 80% of the value of the property. Which, at $170,000 (banks are being conservative in their appraisals due to current market conditions) is only $136,000. That only provides $21,000 and would not cover the entire debt load. Still, we had banks try to get us a good interest rate for a $136,000 loan (to refinance the mortgage and lump it with our credit card debt at a low interest rate). We were hoping for between 4 and 4.25% (our current mortgage rate is 6.75%). Unfortunately.. a good credit score isn't what it used to be and even though we are both between 720 and 745, our credit is only good enough to warrent a 6% loan.

It's a catch 22. Our debt load is too high to have a "good" credit score, and we can't lower the debt load because we don't have a good enough score.

We haven't given up trying to consolidate our debt at a lower rate. We are now in talks with a mortgage company and are waiting to see what they can offer us. It is very frustrating however. We've put a great deal of effort into being financially responsible. We do not default on loans, we pay our bills on time. The debt on the cards is about 90% home repairs and interest. In the past year, our interest rates on the cards have gone up and the available credit limits have come down. Part of me can't help but feel like a failure. Like I made a mistake choosing to take on a fixer upper.

When I get too down though, I think of January and how we'll be holding our daughter soon. God has already provided us with everything we need to take care of her and I am very thankful for that. We have our health, and her health and even the health of our critters, so I can't complain about our situation.

Still, pray for us and keep your fingers crossed that we can set ourselves up to be more finanically secure before Sophie arrives. I need that weight off my shoulders.


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