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Home > Ask The Get Out of Debt Experts > How Do I Refinance My Mortgage When It’s Underwater and I’m Loaded With Credit Card Debt? – Dan

How Do I Refinance My Mortgage When It’s Underwater and I’m Loaded With Credit Card Debt? – Dan

“Dear Damon,

I have about 53K in credit card debt (18K is @29.99).

I plan to reach out to someone for help (still trying to figure out who to call first) for hopefully getting help negotiating a better deal on all the debt.

I have house; assessed value is now probably 300k and my 1st mortgage is 272K (@8.1%) and my heloc is 69K (@12.97%).

But by paying all the minimum payments via autopay, we’re struggling with what’s left to afford basic food and medicines.

Two questions:

1) Do I have any hope getting my mortgage refinanced given that it’s underwater and my current credit card debt

2) Should I stop paying the minimum on my credit cards right now, instead pay for our basic needs first or should wait till I can make a plan with a debt coach or bankrupty lawyer (given the potential impact on my credit score, though at the same time I’ve heard that credit card companies don’t generally want to cut a deal if you’re not behind on your payments).

Thanks,

Dan”

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The Answer

Hello Dan,

Without knowing more details it is impossible to tell you exactly what to do. However if you are struggling to pay the basic things, then yes we are going to have to do something. How much of an adjustment you will need to make is not clear based on the limited information you have supplied.

The likelihood that you can qualify for a traditional refinance is basically zero, however that doesn’t mean you are not a potential candidate for a loan modification. If your cards are maxed out and you can’t afford to pay the minimums then you will likely have to let them go while we figure out if you can pay them back with lower interest rates, can approach them with some settlement offers down the road, or also potentially explore a bankruptcy.

I would recommend you schedule a telephone consultation with me so I can get a much better understanding of your overall financial situation, and then help you put together a step by step plan of exactly what you are going to need to do to get yourself out of this debt, and back in a solid financial position where you can actually cover all of your bills and start saving money again.

How Do I Refinance My Mortgage When Its Underwater and Im Loaded With Credit Card Debt?   DanHow Do I Refinance My Mortgage When Its Underwater and Im Loaded With Credit Card Debt?   DanDamon is a talented independent debt coach that provides in-depth assistance and consultations for people struggling with debt. If you want a personal debt coach to help you through a difficult situation or want assistance to find secret discounts offered by debt settlement companies I think Damon Day is an excellent person to contact for advice and assistance. He can be reached directly at DamonDay.com

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Damon Day
Damon Day is a talented Debt Coach who offers fee based consultations to consumers as an alternative to the typical free debt relief consultations which are nothing more than thinly veiled sales pitches lacking any real information to help a consumer make a good decision. You can learn more about how he can protect you from getting ripped off at DamonDay.com
  • KPP

    Given the mortgage interest rates you mention, you should consider loan modifications as well as credit card solutions.

    You should investigate wether you live in one states with the Hardest Hit Funds, as some of them have second mortgage programs that will replace the existing one with a low or zero percent interest loan, which may not have any payments due for 10 years, and may be forgivable after a specified period of time.There are literally billions of dollars available. Contact the program administrators in your state:

    http://www.treasury.gov/initia

    Most of these programs are administered by HUD approved agencies. These agencies always perform loan modifications for free:

    http://www.hud.gov/offices/hsg

  • Anonymous

    Given the mortgage interest rates you mention, you should consider loan modifications as well as credit card solutions.

    You should investigate wether you live in one states with the Hardest Hit Funds, as some of them have second mortgage programs that will replace the existing one with a low or zero percent interest loan, which may not have any payments due for 10 years, and may be forgivable after a specified period of time.There are literally billions of dollars available. Contact the program administrators in your state:

    http://www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/Pages/default.aspx

    Most of these programs are administered by HUD approved agencies. These agencies always perform loan modifications for free:

    http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

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