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Looking for options
November 25, 2018
6:28 am
bradmxz
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November 25, 2018
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Hi. I’m looking to see if someone knows a way that I can upgrade to another house with my situation. I currently have a mortgage for the last 10 years on my home in which I have never missed a payment. The home and land was appraised this summer at $70000. The remaining balance in the mortgage is $48000. So I need to know how I can take this equity and get another mortgage with it. Unfortunately I am unemployed right now temporarily of course. I have a high debt ratio which is causing my credit score which is 598 to stay low but have an excellent payment history from 2008 to current. Have never missed a vehicle payment in 10 years, nor a credit card payment either. The reason I need to upgrade is my family has grown and there just isn’t enough room for us here anymore. I would like to keep the property if possible, but getting rid of of is also a possibility. I guess what I’m looking for is a foolproof way to upgrade here. If I have to pay a little higher interest I’m fine with that as well. Any help is appreciated

November 25, 2018
11:13 am
semi-retired
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April 15, 2015
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Just reading your story,I think you are financially maxed out.If your home was recently appraised at 70,you have had it for 10 yrs,you paid possibly 55ish,or less for it,and you still owe 48.That looks to me that you are just keeping your head above water.If you " have" to upgrade I would most certainly sell before buying slightly bigger.Carrying 2 mortgages along with your other bills would be financial suicide.Not to mention being unemployed.What kind of down payment would you have for the 2nd property?If only the minimum,you would be nailed for mortgage insurance right of the top,plus probably much higher mortgage rate.This is only my opinion with what you originally stated.Most people on this site are very prudent with finances & would probably agree with me.

November 25, 2018
11:49 am
Norman1
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April 6, 2013
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The credit score of 598 is a big red flag to lenders.

Not sure if that score is a Canadian FICO score, Equifax Risk Score, or TransUnion CreditVision Risk Score. If that is a Canadian FICO Score of 598, then there is around 39% probability of a default in the next two years, according to this table that came with my FICO score: sf-frown

FICO
Score
Deliquency
Rate
Up to 499 78%
500 - 549 60%
550 - 599 39%
600 - 649 23%
650 - 699 12%
700 - 749 5%
750 - 799 2%
800+ 1%

A delinquency is a loan default, a bankruptcy filing, or reaching 90 days past due, in the next two years.

November 25, 2018
11:52 am
Loonie
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October 21, 2013
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I understand that you are very short of space in your house, but that does not mean you can afford a more expensive one. You can't. You need to distinguish between want and need. You're living there now, even if space is tight, so you can continue to do so until you can afford better. Don't have any more kids until you have a place to raise them.

Here are some options, as I see it:
1. Sell the house and buy a larger one at a similar price in a less convenient location. Downside is real estate and legal fees etc out of pocket.
2. Build an addition to current house after you get a job. You refer to the "land" and "property", so it sounds like you are living in a rural area and have the room to expand. Perhaps an out-building would help, for storage of seasonal items etc., freeing up more space in the house.
3. Live with what you have until you can truly afford more. You can't afford to stretch yourself financially any more right now despite your good payment history. Your credit score is low because you are maxed out.
4. You or spouse, if you have one, need to find a way to earn more money. Maybe some of your kids are old enough to get a part-time job?
5. If you have the skills, make some renovations in your house to allow for more efficient use of space - when you have an income again.
6. Watch some of the "tiny house" videos on youtube to see what can be done with very very little space. You'd be surprised, I think. Some of them are really inspiring.
7. Get outside more, with your family. If it's too cold, go to the library. Get out of the house in order to enjoy bigger spaces more often.
8. Have a family meeting, everyone decide what they can get rid of. Have a big house cleaning and clearing. have a garage sale, sell stuff, give it away or throw it out. This will free up space.

Don't make a move without pre-approved mortgage approval, or you will be in deep doo-doo. There is also a good possibility you won't be able to get another mortgage as long as you are unemployed.

I note that you haven't told us if you are carrying other debt besides the mortgage, but you do say you have a high debt ratio and it appears you are paying for a car loan. A mortgage of 48K does not seem to account for this high debt ratio by itself, although it depends on how much you are earning when you work. Pay off your non-mortgage debts before you even think about moving to a more expensive house. You're paying a higher rate of interest on them than you on a mortgage, and rates are going up.

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