BILL'S ANSWER
You have not provided me with enough information to provide you with an answer to your question. Would your parents be willing to refinance the home to consolidate the $37,000 worth of debt that you owe? How much did your parents put as a down payment for the home they purchased? What was the purchase price of the home, and how long ago was it purchased? What are your parents credit scores? How much income do they earn? There are more questions that I would need to know in order answer the question you asked.
All of these are important questions to have answers for. If your parents are not willing to consider this route then there is not much more to say. If they are willing to look into this as a possible option then there are some factors you may want to consider when it comes to refinancing a home.
First, does the home have enough equity to pull cash-out? Equity is the difference between what a home owner owes to the bank and the appraised market value of the home. For example, if your parents owe $80,000 on a home that is worth $100,000 that means they have $20,000 in equity. In other words they have 20% of equity in the home, and they owe 80% of what the home is worth. Most banks will not lend beyond 80% of the value of the home. In this example a homeowner might not be able to refinance to pull cash out and consolidate the debt.
Second, assuming that their is enough equity in the home to pull out $37,000, there is the issue of your parents debt-to-income ratio. Your debt-to-income is the relation between what you owe and what you make. To calculate your ratio, take your monthly debt payments (such as house, credit card, and payments) and divide it by your monthly take-home income. Monthly debt payments are considered anything you can't pay off in 6 months. Items such as monthly food expenditures, utility bills, and entertainment expenses should not be considered when calculating your debt-to-income ratio. By increasing their loan by $37,000 this means that their monthly mortgage payment may be much higher. This could impact their debt-to-income ratio and make it difficult to qualify. I don't know what your parents financial situation consists of so it makes it difficult for me to say if this would be a problem. To find out more about debt-to-income please see DTI: Debt-to-Income Ratio Information.
Credit score is one of the other factors that is very important when trying to refinance. In addition to the other criteria mentioned above a lender will look at a borrowers credit score to determine if they are qualified to refinance. If they are willing to consider this option for you they will want to make sure they are in good standing with their credit. To find out more about credit scores please see Credit Score Report and Information.
If your parents are willing and able to refinance their home and consolidate your debt then I would recommend you and your parents to visit .
If the refinance does not work you may want to look at your other options in order to deal with your debt. I recommend that you visit Debt Consolidation and Bill Consolidation.
You may also want to take a look a debt relief company we recently did a review for Freedom Debt Relief Customer Review to see if they can assist you with your debts that are past due.
I hope this information helps you Find. Learn & Save.
Best,
Bill
www.bills.com/
September 28, 2010
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