I got the question below through the GetOutOfDebt.org site from someone that identified themselves as In a World of Hurt. Feel free to visit GetOutOfDebt.org and ask me your question, you can use an anonymous name, it’s okay.
We owe $103,000 on our first mortgage, $16,000 on our home equity loan, and $17,000 in loans and credit cards. Monthly out go currently $3,500.00 including utilities and necessities.
I was approved for a complete refinance which would pay all of the above off, and make out monthly out go 1220.00 + utilities and necessaties. We would have 1500 each month left over and by sending an extra 1000 a month payment to the principle blance we would have regained our equity in approx. 3 years.
The only problem is our equity was a gift to us from my parents, and I really do not want to tell them, where as my husband thinks we should tell them or we just won’t refi. So for now I have put the refi on hold. What would you or your readers do?
Do the refi and not say anything because this was a gift of money and by that they knew this was potentially an option?
Let them know you are going to do the refi and what your plans are, even though the reprocusions are going to most likely end up in a world of hurt?
Forget the refi, and find a nother way to get out of debt? That way the money is still there, and no one has hurt feelings.
In a World of Hurt”
Dear In a World of Hurt,
Well on one side of the coin your parents gave you money that created equity in your property and it does not sound like they attached any strings to that gift so technically I guess you could go do whatever you wanted to do. But that’s not what I would do.
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Your parents probably gave you that money to use for the house so that they would worry less about you knowing you’d have a payment that was manageable. They most likely felt like they were setting you off on a sound path. It was extremely noble, kind and compassionate for them to do that for you. A gift that not many receive.
I think you owe your parents the respect, trust and faith to share with them what your situation is and the good news that you have a sound plan for addressing it. It is much better for you to be open and honest about what your intentions are than to have to keep this a secret that you are afraid will hurt them.
Moreover, I think you should also ask your parents to help you to be accountable for your plan and ask them to check your debt reduction promise to get back to where you started with their gift.
The accountability request helps both them and you and while there is no obligation for you to, it will demonstrate to them that you are returning your financial life back to the position they had hoped to create for you as a starting point. That will give them comfort and help you to achieve your goal.
Be sure to let me and everyone else here know what you elect to do.
Here’s a big hug for you and your husband.
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