Dave Ramsey, debt, credit cards, retirement, etc

[SeaLion]

Maybe, we really like it here. We have a 10 month break even on the closing costs, so why the heck wouldn't we refi?

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.

 

[douglee25]

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.

Interesting. Not aware of that either.

Doug

 

[Matt_E]

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.

Aha.
Are you telling us that Joe Schmoe can take out a $500k mortgage for a house, default on it 2 years later, and NOT be sued for the difference?

 

[SeaLion]

Yes that's basically a non recourse loan. As soon as you refi, take cash out, consolidate, it turns into a recourse loan and you can be sued for the outstanding balance. Most do settle for quite a bit less but you have full protection if you never mess with your original 1st mortgage. In the clusterfawk we are in now, the odds of the banks going after you are slim. They don't want or can't cover the costs associated with pursuing it and then have to settle. They have not even gotten to all of their foreclosures because there is such a backlog. I just wanted to make light of this little known issue. Knowledge is power.

 

[afcblink]

Yes that's basically a non recourse loan. As soon as you refi, take cash out, consolidate, it turns into a recourse loan and you can be sued for the outstanding balance. Most do settle for quite a bit less but you have full protection if you never mess with your original 1st mortgage. In the clusterfawk we are in now, the odds of the banks going after you are slim. They don't want or can't cover the costs associated with pursuing it and then have to settle. They have not even gotten to all of their foreclosures because there is such a backlog. I just wanted to make light of this little known issue. Knowledge is power.

Yes, FHA, VA, etc., are non-recourse, but not all original loans are non-recourse to start with.

 

[SeaLion]

They are in my state, California. I don't know about other states. I imagine many are non recourse too on the original loans. Regardless, a refi, heloc etc turns it into a recourse and that was little known info I was relaying.

 

[SuperJETT]

 

[yamasaki]

lol, that chart applies to maybe 1% of the people on this site.

you'd need a huge slice for HOBBIES - 18%

lol

 

[oxnard111]

Just paid off one of my cars a couple nights ago... Waiting for the pink slip to come in the mail.

Moving onto the next car (next smallest outstanding balance) which should take only 3 months, then attacking the school loans. Will be able to pay $2,300 a month on the school loans.

Living with my parents again sucks, but will be totally worth it.

 

[tightithrash]

Just paid off one of my cars a couple nights ago... Waiting for the pink slip to come in the mail.

:woot::woot::woot:NICE!!!!

 

[BruceSki]

A letter i just got from the credit card company:


Dear Bruce Fisher,

At First National Bank of Omaha, we periodically review our customer's accounts. In reviewing your account, we noticed that you have not used your College Visa Card for 19 months or longer. Therefore, we have closed your account as of November 19, 2009.

We apologize for any inconvenience this has caused.

Sincerely,
Credit Department
First National Credit Card Center

 

[oxnard111]

A letter i just got from the credit card company:


Dear Bruce Fisher,

At First National Bank of Omaha, we periodically review our customer's accounts. In reviewing your account, we noticed that you have not used your College Visa Card for 19 months or longer. Therefore, we have closed your account as of November 19, 2009.

We apologize for any inconvenience this has caused.

Sincerely,
Credit Department
First National Credit Card Center

happening left and right. companies are trying to lower there outstanding available credit.

gotta use the cards and pay them if you want to keep 'em.

 

[SharkB8]

FWIW, when you or the lender closes a cc account, it hurts your credit rating.

Of course if you're a Dave Ramsey fan you may not care.

 

[BruceSki]

my credit rating is in the high 700's so i don't think i have anything to worry about.

not financing a car anytime soon and won't be buying a house for a few years. all the bills get paid on time or early.

 

[SharkB8]

Don't wanna jack the thread but anyone interested in increasing their credit score should read "7 steps to 720". The audiobook is available on most torrent sites. The audio version has an infomercial tone to it but the information is good. It has become a bit of a hobby for me to get my score into the 800's using advise from that book.

 

[SuperJETT]

FWIW, when you or the lender closes a cc account, it hurts your credit rating.

Of course if you're a Dave Ramsey fan you may not care.

Not true. We paid off all our consumer debt and closed a few cards and when we refinanced this year, our credit scores were about 20-30 points higher than when we had $30k in consumer debt.

 

[SuperJETT]

BTW, both our scores were over 800 when we refi'd back in May, going by Dave Ramsey's plan.

 

[Mile9c1]

How long's it take to lose one's credit score, going by Dave's plan (no credit cards)?

I like Dave's plan but I use my one credit card as much as possible, for convenience.

 

[SuperJETT]

How long's it take to lose one's credit score, going by Dave's plan (no credit cards)?

I like Dave's plan but I use my one credit card as much as possible, for convenience.

How is using a credit card more convenient than a debit card?

 

[SharkB8]

Not true. We paid off all our consumer debt and closed a few cards and when we refinanced this year, our credit scores were about 20-30 points higher than when we had $30k in consumer debt.

Going from 30 grand in consumer debt to zero is an extreme case.

For the other 99.9% of the population who probbably aren't going to do that, closing an inactive credit card account increases the ratio of debt to available credit. It can also decrease the average age of your credit history, depending on which card you close. Neither of these help a credit score.