Mortgage question/help?

[atatat]

Here is my general story:
My husband and I have been married for 12 years. We have had a tuff financial past. Back in 2000 we had to file Bankruptcy. Yes, we had to. My daughter was very ill, DH lost his job, and I found out I was pregnant again. I did not have a job, and had to take care of my daughter and her medical treatment. We kept our home, our cars, and reallt only erased tons of medical bills and credit card debt. Yes, the credit debt was our fault.
We thought it was the right thing at the time, and it was way too easy. We had no idea what we were doing actually. Since then, everything has been getting better. My DH joined the IBEW and now is an Union Electrician. My little girl is now 10 and healthy, My son is almost 7 and we have a 3 year daughter too. We bought a new home in 2003. However, we still "didn't get it". We never budgeted our money and actually could not afford it because we had credit cards (again), a high interest rate on cars, and home. Not to mention a bigger home =higher utilities, more children=higher food bill, growing children=more expenses for everything. Long story made really short...My grandfather paid off our home and we have a legal contract with him now for our mortgage. We pay him 5% interest. We have 2 credit cards still with only a combined total balance of around $1500.00. We still have 2 vehicle payments. However, we are not behind on any bills, yet we do not have any savings,investments, etc..
Here is the question:
I feel guilty about owing him. It eats at me everyday. I know he is wealthy and he probably doesn't even thinnk about it, but I do. I can say that I feel like I have used the system, used my family and never really had to "own up to my finances". I want to be able to feel good about my future, and know that I did it on my own. However, I don't know where to start. Yes, being here for a few weeks has helped alot! I am seeing more and more POSITIVE things about money than all the NEGATIVE I have associated money with for as long as I can remember. So, my question(sorry for the drama) is should I try to refinance my home and take back control of my own mortgage My husband really does not contribute to any decissions, he just works and hands me the money. (that's another issue..lol) I guess I am at the point where I want to feel like I control my life, and not being helped . I could really use anyones advice. Thanks so much.

[Broken Arrow]

Welcome.

I think you've done what is the most important step of them all: The first one. That step where you have chosen to take a turn for the better in life.

The next step is to get your budget setup and your expenses under control. Living below your means. Ths is probably the next most important step. However, I see you have begun that process already, so that's wonderful.

I'm not entirely sure that you should feel bad about owing your grandfather money. After all, he will be making interest off of your debt. Well, if anything, all that is just more incentive to pay him off early.

Don't worry though. If you keep at it, things will eventually get better. Take care!

[atatat]

Well, I do thank you for your reply. I understand my willingness is 1/2 the battle to change. I am so determined to get it right. I want nothing more than this time next year to feel comfortable and pleased with where my family is financially.

Living below our means is the TRUE factor here. I guess we are sort of stuck now. There are alot of factors that really can't be changed. I mean our vehicle payments are more than our mortgage. I know that is so stupid! That is an example of our poor judgements in the past. We pay $794.23 a month for our 2 vehicles and our mortgage payment is $617.34. HOW STUPID is that!!! It makes no sense I know. However, my vehicle will be payed off in December. I am going to drive it until my feet fall thru the floor..lol . Then we will only have 1 car payment at $363 a month. My grandfather was going to include my car balance in the mortgage..but we decided not to. The interest has already been payed 10X's over..and no sense in making yet another mistake. Plus with bad credit, to no credit, I thought leaving those as they are would help our credit score.

I also wanted to say the main reason I feel guilty is because I know he could be making more than 5% interest on the $115,000 that we are repaying. We have a legal contract in this that is set up to only be for 10 years. On 2/10/14 we are to make the final balloon payment for $93,770.80. That is where wer intended to have our finances in order and be able to refinance that amount. However, besides the guilt, I am wondering if I should just refinance now? It's like a big issue, we need a new roof and windows bad. Well, with no savings, no way to prove equity since it's not really listed in credit reports, we are stuck. It sort of a no win situation. The home itself is wonderful, and actually worth alot more than we bought it for and are paying now. So, in that aspect we did the right thing. My husband does make good money and we can actually afford to live here(once we get that darn car payment out of the way). So I do see a light at the end of this year. I just am so overwhelmed with all this.
I just need some guidance. I've tried everything, and never followed through with anything. I need..no I MUST change. Once again, sorry for all the drama. I'm finally being honest and I just need to vent. TY

[Jenlee]

Why don't you give it one year from today and say, "We will live life to the frugalest for one year and see where we are after a year of frugal planning/shopping and one less car payment." I think you will find that if you give yourself a goal with a deadline you will feel better and be able to prepare for it.

Your grandfather could be making a little more money with a different investment, but he obviously wanted to help. If the home is worth more than you will owe, you can finance it for as much as you want and then maybe have enough for a roof and windows. Good luck.

[autoxer]

Originally Posted by atatat

So, my question is should I try to refinance my home and take back control of my own mortgage .......... I guess I am at the point where I want to feel like I control my life, and not being helped.

You could take out a mortgage and pay back your grandfather, but that is only moving debt around. You are either going to have a legal contract w/ your grandfather at 5% interest, or have a legal contract with the bank for a higher rate. Try to focus on the bigger picture. Will a traditional mortgage improve your situation? As long as your grandfather doesn't use his lending to control or manipulate you, then you shouldn't let the emotions have so much control.

Originally Posted by atatat

I also wanted to say the main reason I feel guilty is because I know he could be making more than 5% interest on the $115,000 that we are repaying. We have a legal contract in this that is set up to only be for 10 years. On 2/10/14 we are to make the final balloon payment for $93,770.80. That is where wer intended to have our finances in order and be able to refinance that amount. However, besides the guilt, I am wondering if I should just refinance now? It's like a big issue, we need a new roof and windows bad. Well, with no savings, no way to prove equity since it's not really listed in credit reports, we are stuck. It sort of a no win situation.

How does your grandfather look at it? Maybe the fact that he can help is worth more to him than the interest that he can earn.

There are many empowering ways to take control of your finances. You can review your spending and eliminate waste. You can open a retirement plan & invest in your future. You could focus on eliminating the higher interest debts. You can calculate your net worth & set some goals.

[atatat]

You could take out a mortgage and pay back your grandfather, but that is only moving debt around. You are either going to have a legal contract w/ your grandfather at 5% interest, or have a legal contract with the bank for a higher rate. Try to focus on the bigger picture. Will a traditional mortgage improve your situation? As long as your grandfather doesn't use his lending to control or manipulate you, then you shouldn't let the emotions have so much control.

I agree in that aspect that it is only moving debt around and around. I was just trying to get so perspective. No, a traditional mortgage will not help our situation. It doesn't help it either. That is my question I guess. I am wondering if actually have a reported mortgage will help our credit? If we are to rebuild or past, shouldn't that be a major factor? I understand what you are saying believe me. My grandfather is wonderful. He never says a word, we just give him the payment every month. We are never late, always give him cash and nothing else. There is no control or manipulation. Like I stated before he even offered to pay off our vehicles, but we declined.
I am just worried that in another year or two when our bankruptcy is off our reports, our cars payments are payed and we have no mortgage...when it is time to pay that balloon payment, will we have a credit? That I guess is my concern.
My roof is old, and does need replaced and our windows are terrible, but ...I think they can last another year/ or 2. These are the things I am talking about....learning how to put things into perspective! Wow..feel a bit better! TY TY

[atatat]

oh and BTW..I'd love to open a retirement plan and invest in my future...but I can't seem to pay for my present.....lol

[LuxLiving]

Dear AtAtAt - why not sit down with your grandfather who obviously has some money wisdom and discuss how he manages his money...as to what financial tips he could give you.

Have you started paying yourself anything first?? I mean is your family even on your list somewhere with some savings...even 1%?

[autoxer]

Originally Posted by atatat

I am just worried that in another year or two when our bankruptcy is off our reports, our cars payments are payed and we have no mortgage...when it is time to pay that balloon payment, will we have a credit? That I guess is my concern.

Make that one of your goals. To keep your credit report in good shape so that you can get a loan for the baloon payment. Review your credit report regularly to check for any errors. (you can get a free report from each CRA each year from www.annualcreditreport.com) Learn what factors go into calculating the FICO score, so that you keep yours up & get the best interest rate when you are ready to apply for that loan.

You might want to consider paying your grandfather with checks instead of cash, so that you have a record of the transactions. Those records can help prove to lenders that you can make payments on time & regularly.

[creditcardfree]

Keep in mind that your credit score currently is based on how well you pay your car payments, too. I don't think that not having the mortgage reported to the credit bureaus is hurting you...it's just not helping. Does that make sense?

The above poster was correct in suggesting that you should learn about credit score and how they work. And keep this as a goal.

I don't think I would ever get rid of a 5% loan! That is awesome. Good luck.

[vsjhoc]

Your grandfather paid off your mortgage, so that should already show up on your credit report as a debt that you paid. It doesn't matter where the money actually came from; a repaid obligation counts in your favor.

[creditcardfree]

Originally Posted by vsjhoc

Your grandfather paid off your mortgage, so that should already show up on your credit report as a debt that you paid. It doesn't matter where the money actually came from; a repaid obligation counts in your favor.

That is a very good point! Why didn't I think of that?

[Ima saver]

I think you should keep your mortgage with your grandfather. You are paying him cash, so he is not reporting the 5% interest, so he does not have to pay taxes on that. I had a family member years ago, that loved to do that! He would loan, and people would pay him back in cash.
You need to learn to set up a budget. The first thing you need to do is pay yourself first and set up an emergency fund. i reccommend that you take 10% of your husband's pay and open up a savings account. If you can't do 10%, do something. Start with 2% and increase it every 3 months. You will get some money saved that way for your new roof and windows. When you get your car paid off this year, take that same amount out of each pay check and put it into your savings, don't spend it on anything else.
Join the $20 challenge. Start saving any extra money you make from using coupons, rebates, etc.

[atatat]

Well thanks for ALL the great advice. Here is some extras that add into the mix.

I think you should keep your mortgage with your grandfather. You are paying him cash, so he is not reporting the 5% interest, so he does not have to pay taxes on that. I had a family member years ago, that loved to do that! He would loan, and people would pay him back in cash.

My grandfather actually does report the interest. This loan went through his lawyer/accountant. He reports the money and I also have to report my mortgage interest. To sit down with him and have him explain how he does it, will ohhh so simple. He is a retired steel mill worker and has had his own farm for 50 years. He still farms, he owns land all over the United states from OH, PA, CO, WI and more I'm sure. He is wealthy by all means and I know exactly how...he works his butt off, buys nothing but work related items for the farm, and pays everything with cash. I do know that the money he paid off my $115,000.00 mortgage was cash from interest he had to do something with. So, that is where he stands. Now, as for my own pittiful self...different story.

Your grandfather paid off your mortgage, so that should already show up on your credit report as a debt that you paid. It doesn't matter where the money actually came from; a repaid obligation counts in your favor.

I never thought of that either. I guess, that makes me feel better! I assumed it would be a negative thing. TY

[quote]Have you started paying yourself anything first?? I mean is your family even on your list somewhere with some savings...even 1%?You need to learn to set up a budget. The first thing you need to do is pay yourself first and set up an emergency fund. i reccommend that you take 10% of your husband's pay and open up a savings account. If you can't do 10%, do something. Start with 2% and increase it every 3 months. You will get some money saved that way for your new roof and windows. When you get your car paid off this year, take that same amount out of each pay check and put it into your savings, don't spend it on anything else.
Join the $20 challenge. Start saving any extra money you make from using coupons, rebates, etc.[quote]

No we do not pay ourself. We do not put anything back. When we have extra we tend to hold in in the house and use it . I know horrible huh? I am willing to do anything to get ahead here. I must have listed everything I pay out everymonth, year..atc. atleast 100 times in the past 3 years, but I just don't know what to do with the numbers. It all looks like it will work, and then I get hit with a flat tire, a Dr. bill, etc. and I'm all off track. I guess I just need to learn how to "plan ahead". I get the fact about saving for emergencies...However, when every Tuesday being payday, and by Wednesday the money has been divided up and just enough left for gas and food...where do I pull the extra from? I just have it and it's gone..and I'm not saying spent on junk...I'm talking like Dentist visits(no dental insurance and a family of 5 adds up), Dr. visits, kids sports fees, then I get hit with b-days, etc...and those are the things that are "killing" us when it comes to saving. Aghghgh...how do I do this. I just get so dang mad. ..I do blame myself at times. because I have no income..but I could not imagine being anywhere else but with my kids!

Ok...I'll wait for the advise...........( my poor house....talk about needing to budget...I need to budget my time better and clean instead of being online when my daughter is napping)...lol

[autoxer]

Originally Posted by Ima saver

I think you should keep your mortgage with your grandfather. You are paying him cash, so he is not reporting the 5% interest, so he does not have to pay taxes on that. I had a family member years ago, that loved to do that! He would loan, and people would pay him back in cash.

20: Watch out for the tax man... The interest would total more than $53,000 for that ten year loan. That may lessen the short term tax liability, but that could be very bad for the estate planning. If the $115,000 isn't considered a mortgage, then it will be considered a gift. And gifts are taxed twice when they skip a generation.

Although I'm glad that you've done it properly, with your home secured against the loan from your grandfather, so that you could deduct the interest that you pay from your taxes.

[LuxLiving]

Breathe breathe breathe -

Then...

Have you looked at many of the things that other folks have talked about on here? My husband said the same thing...there is no extra here to save.

O yes there was, but it was hidden.

Where? In our case, in the telephone bill with all the little extra charges, such as caller id, which phone we were making our long distance calls from. From our car insurance when I raised the deductibles (we have excellent credit so if there had been an accident we could of covered the difference there - but soon we had our EF up to snuff so it could handle that if an accident occured.)

We put the house utilities on average pay so that evened out over the year. No more giant electric bill in January sending me into panic mode. So instead of coming up with 250 in January I come up w/80 a month and all the other months so I don't think in April when the bill is only 35 that I have the difference to poop off somewhere. In addition it's about trying to cut down on useage as well so the average comes down.

Birthday gifts got averaged as well. Instead of buying just what I found that someone might like I decided on what we could afford (not near as much as I had originally thought) and buy to stay within the budget.

Sometimes until the bills got straightened out The Hubster and I put off our 'routine maitenance' on our teeth. Never the kids though.

There are more examples that I can't think of at the moment. Others here have experienced the same belt tightening and can possibly give some other suggestions.

[atatat]

Originally Posted by LuxLiving

Breathe breathe breathe -

Then...

Have you looked at many of the things that other folks have talked about on here? My husband said the same thing...there is no extra here to save.

O yes there was, but it was hidden.

I must say that I too have went over the options....We are on a budget for our heat(gas)$94.00/M, Electric $85/M, Cable $35/M, Phone $42/M our water can't be averaged but it ranges from $68-$72/M. We have basic cable, no cell phones, basic home phone. I guess I am not seeing where to cut unless it is our water and electric uses. That I know can be addressed. With 3 kids...things are always being left on lights and water. I will be sure to look into those.

Do you or anyone think that if I listed all my expenses, and income that someone can look into what I am doing wrong? I don't want to be a pain , but I do need some insight. I have everything but I just need help. I would appreciate it. I have nothing to hide and ONLY money to gain. TY

[atatat]

Originally Posted by Ima saver

Join the $20 challenge. Start saving any extra money you make from using coupons, rebates, etc.

I have been seeing the $20.00 challenge, but have no idea what it is. where can I learn more and how to get started? Thanks again!

[LuxLiving]

Yes, the folks on here will offer you some suggestions if you give ACTUALS. Some ideas you may like and others won't be for you. So be prepared to take the suggestions with a grain of salt and carry on with what you and your family can see as doable for your situation.

go on and post ahead...

also post what financial gurus if any you have been reading / listening to.

[atatat]

Oh, I have nothing to hide. I am ready for real truths. I understand that some options people have made (and will make) work for them...and not necessarily ideal for my family. However, everything is worth learning and trying. I can say on the most part I am frugal when it comes to certain things, i.e. thrift shop clothing, yard sales, selling items here and there on Ebay, I clean a house for extra cash (for kids fun stuff). We eat every meal at and get pizza maybe 1 time month. We don't go out to movies, we play outside, sit by a camp fire, kids only get New toys or New clothes when grandparents buy them. So, I just really have to take a good hard look at all those stupis things I buy, spend cash on that make no sense!
I'm lloking ofrward to all the advise......no bitter feeling here! The truth may hurt, but not as bad as the place my finances are.