Taking a loan out to pay off upside down home loan??

[mj662]

Hi guys hopefully I'm posting in the correct forum but anyway this is my question...Can I take out a realestate loan to cover my upside down home loan?? When we sell our home we will need to come up with about 20-25K to cover the balance....is this possible?? I know its not the best thing to do but I have a growing family and must get a bigger home....Plus I can get a much bigger home for around the same payment,,,,I'm just kinda stuck here,,,any ideas?? thanks guys

 

[crws]

Hi guys hopefully I'm posting in the correct forum but anyway this is my question...Can I take out a realestate loan to cover my upside down home loan?? When we sell our home we will need to come up with about 20-25K to cover the balance....is this possible?? I know its not the best thing to do but I have a growing family and must get a bigger home....Plus I can get a much bigger home for around the same payment,,,,I'm just kinda stuck here,,,any ideas?? thanks guys

you would have to elaborate on where you came up with the funds...
since the TSP loan would be "off the books".
On the positive side, you would have 15 years paying 3% to yourself, and if you were able to scale your contributions back to the minimum benefit and apply the difference in % to your loan, you could pay it off sooner.
But- the lenders will want to know where you got the cash, i.e. "gift from family members" if you get my drift.
BTW, 15 years is a long time to have that amount of cash out of earning potential circulation.....
GL

 

[Boghie]

MJ662,

I am not the best bubba for TSP loan questions - but...

Me thinks a 'Real Estate' loan from TSP is to BUY real estate - not to fund the underwater portion of existing real estate. Hopefully, some of the folks on this site can answer that question.

Also, something left unsaid...

If you leave Federal service you must PAY IT ALL BACK - like immediately. So, if you are moving because of an opportunity outside Federal service do not take any TSP loan.

If you are not leaving Federal Service than the standard TSP loan might be something to look at (if I am correct on the limitations of a real estates loan). The payoff would have to occur within 5 years.

Thus, at todays rate of 3% your monthly payments would be about: $450.

And CRWS is right about everything...

 

[Handballer]

Hey bubba, he didn't mention anything about TSP.

 

[burrocrat]

MJ662,

I am not the best bubba for TSP loan questions - but...

Me thinks a 'Real Estate' loan from TSP is to BUY real estate - not to fund the underwater portion of existing real estate. Hopefully, some of the folks on this site can answer that question.

Also, something left unsaid...

If you leave Federal service you must PAY IT ALL BACK - like immediately. So, if you are moving because of an opportunity outside Federal service do not take any TSP loan.

If you are not leaving Federal Service than the standard TSP loan might be something to look at (if I am correct on the limitations of a real estates loan). The payoff would have to occur within 5 years.

Thus, at todays rate of 3% your monthly payments would be about: $450.

And CRWS is right about everything...

can only use a real estate loan to purchase new, not refinance or shuffle current.

a general loan can be for about half your balance up to 50k up to 5 years for anything you want to use it for. you don't have to pay it back if leaving gubmint service, just have to pay taxes +10% on it, but if you really need the money that might be acceptable. and if you have a growing family the tax credits might offset the liability come end of year, maybe not get the refund but no out of pocket.

 

[mj662]

can only use a real estate loan to purchase new, not refinance or shuffle current.

a general loan can be for about half your balance up to 50k up to 5 years for anything you want to use it for. you don't have to pay it back if leaving gubmint service, just have to pay taxes +10% on it, but if you really need the money that might be acceptable. and if you have a growing family the tax credits might offset the liability come end of year, maybe not get the refund but no out of pocket.

Ok so I can only use a tsp loan if I buy a new house?? I suppose it may work if I build a new home and try to work out a trade with my current house? I dont know.......

 

[crws]

Hey bubba, he didn't mention anything about TSP.

good point! Heh, heh. Ass u me

 

[crws]

Ok so I can only use a tsp loan if I buy a new house?? I suppose it may work if I build a new home and try to work out a trade with my current house? I dont know.......

It's all in the book:

https://www.tsp.gov/PDF/formspubs/tspbk04.pdf

https://www.tsp.gov/PDF/formspubs/oc96-16.pdf