Financing a Liveaboard

[LauderBoy]

Originally Posted by hellosailor

Can't make assumptions like that unless you assume the worst case.

Rather, it's best not to make assumptions at all and talk to a good accountant.

But people don't have to stay with an upside down mortgage. It's not the first time stuff like this has happened. My parents couldn't give away their home in 1980 for half what they owed for it so they let the bank take ownership of it.

[ddsailor25]

We bought the house and won't run from our contract of paying for it. When were ready and able to sell then we will. It will end up costing us more money but ill be able to sleep at night.

[Khagan1227]

Can't really see your problem if you finance the boat when you are still living in the house. You'd truthfully use the address of the house on the finance papers when you got the loan, after that send them a change of address or pay the loan online.

No different than buying a car, then moving to a new location. We've done this many time in the military and have never been asked where the collateral was located.

[maytrix]

I'm no financial guru or anything, but wouldn't it make the most sense to just put the $700 a week towards the mortage? Paying off an extra $2800 a month with go all towards the principal which as stated in 3 years would be $109,200 less you'd owe on your home. Not to mention the interest you'd save. If you went with 5 years, you could do that for 3 and save for 5 which I would think would certainly get you out from where you are now.

Even with today's low interest rates (and I imagine you aren't as low as they are since you are upside down), I would think your money is better spent paying off the higher interest mortgage than sitting in a bank account making next to nothing.

The other thing to consider is that the home market may never come back. That's not to say it won't go up, but homes may not go back to the values they once were.

[Nauti-Nauti]

Late to this post but with current information. We are full time live aboard cruisers. Excellent payment history, credit and bank balances. We have been trying to re-finance at the new lower rates but get resistance from all quadrants and all lenders. The bank that we have our current loan with will not refinance us because they say they no longer do live-aboard s. I know that they are making a higher interest rate off of us but wouldn't it make sense for them to lower our rate thereby making it easier to continue a never late, never missed payment? It's a sign of the times, the chicken s--t robbers that all got bailed out with our tax $$$ don't want to do business with real people, only those that really don't need them. In the meantime, they get huge pay and bonuses. We are going to the Annapolis Sail Boat Show and will try to do some work there. One thought I have is to lean on the Mfg's, telling them, I'll buy a new boat if they can find the financing. Sometimes, you just have to kick the dog.

[hellosailor]

"but wouldn't it make sense for them to lower our rate thereby"
No, it would not make sense for them to lower the rate. They are using your loan to pay off long term notes to investors who supplied the money (to them) for your loan. Those investors may be earning 5%. If the loan company lowers your rate--where will they find another source of as much money? Because they are required to keep paying off those investros, at that rate.
You skip town or default, that's another story. But they can't just lower the rate to be nice guys. They're not in the business of being nice guys, they have to pay investors the promised rates.
If you put your money in a CD or other investment, and the company called you back and said "We're gonna pay you two percent less from now on, because we're nice guys and we're reducing loan rates to everyone else." Would YOU be happy? To lose your income because someone wanted to be a nice guy?

Don't think so.

Robbers, scams, whores, thieves, and fools, ergh, excuse me, investors, who got scammed out of all the money they shuld have never made, have nothing to do with that at all. They're just incidental matters.

[zeehag]

do yourself a favor--- rid yourself of your current debts BEFORE you go over the top into a boat. there will not be a recovery soon-- the plan is to devalue dollar-- we are all screwed in that case---- get rid of current debt then buy a boat.

[Nauti-Nauti]

I follow you and your reasoning hellosailor. These are things that we all know. The point they are missing is this. With the market the way it is and in the lack of cooperation, I will pay off my loan, they will have NO INCOME from me and be worse off. The point is that we do have options and for me it seems rather stupid to turn away good business.

[sww914]

The banks will NEVER honor their word. They will always choose the most profitable way out. Your word is important to you, I get that, but you're dealing with scoundrels. Just keep that in mind.
They stole our house when my disabled kid had 2 broken legs with 4" long stainless screws sticking out. We weren't behind in our payments when the whole thing started. We did everything that they asked for when they asked for it and they still auctioned off our house the same week that they told us that our loan modification was approved. They never foreclosed, they just sold the house, the same week that our boy was in the hospital 200 miles from home.
They said not to worry, that everything was fine. Fine for them I guess, but me, not so much. Out on the streets (in essence) with a kid in a wheelchair and on painkillers because 2 broken legs hurt a lot at first.
They'll do the same to you given the chance.

[JRM]

Originally Posted by Nauti-Nauti

I follow you and your reasoning hellosailor. These are things that we all know. The point they are missing is this. With the market the way it is and in the lack of cooperation, I will pay off my loan, they will have NO INCOME from me and be worse off. The point is that we do have options and for me it seems rather stupid to turn away good business.

Or not. Given that between QE and QE2 the Fed has more than tripled the monetary supply while the GDP drops, most folks would say we're in for a world of inflation. At which point, you paying off your loan now will infuse them with current dollars they can invest elsewhere in more inflation resistant vehicles, as long as yours is a fixed rate loan. They're not dealing because they win either way.

We're in the market for a bigger boat, and we'll end up financing part of it. But it's got to be at a fixed rate. Those weenies in our government changed the way they calculate and report inflation to lower the number and hide the effects of our deficit (USA here). But it can't last. Inflation, even the lower number they're giving us, will start to head up, dragging interest rates with it. Anyone with a variable rate loan is going to be seriously screwed, especially something like a boat that will be depreciating rapidly anyway.

The USA debt to income ratio is currently 7:1, with no possibility of paying it back. Yet the banks tell me I need to be below 42% debt ratio (I know, different numbers, but same idea) to get a boat loan. Like DOJ said, buying and affording are two different animals. I could physically purchase the boat we want today, and even at the current asking price. But it wouldn't be affordable. I suggest you sit down with an accountant/ financial planner and figure out what you can really afford (not just buy), and then work out with them based on your current spending and savings rate, how much does that number rise (or fall) each month.

I know what we can afford. I know what we want. And, barring any unforseen events, I figure those two lines on the graph will intersect somewhere around December-January. If the price on what we want drops, it could be sooner. If we find something we like better that's a bit more money, it'll be later. The longer we wait, the more we can afford (or the more affordable what we want becomes).

Also, before you sit down with that accounting type person, I'd suggest you either grab GNUCash (free) or Quicken (not free) and stuff as much of your financial information into it as possible. It eliminates much of the guesswork, and can give you a lot more hard data to base your decisions on.

JRM

-- the waiting is the hard part. luckily we have the current boat to sail on while we wait.

[VERTIGO]

We are in the same situation, kinda. Not upside down in the current house however the price has dropped so much that we have to rethink our timeframe. Good for you sticking with it, kinda shocked at the advice to walk, that has such long reaching consequence that may have a profound affect on anything you do in the future.
My 2 year plan has become a 4 year plan that we are 2 years into. Every once in awhile I get a serious itch to finance until I do the calculator and see how much I would pay in interest and how much I will save if I can just hang in there 2 more years.
We do not "save" a nickel. Everything goes to the house, the minute my check hits my account I am broke 3 minutes later. We use a credit card for everything and pay it off first thing every 2 weeks. Pen Fed does pretty good with 5% cash back on fuel and 1% on everything else. As long as you never carry a balance 15% on any balance you do not pay off. Also just refinanced our car to pay off our current boat loan. Boat loan was 6.375 cash out refi on a car was/is 1.99%. $60 a month in instant easy savings.
My bank will never give me a better rate until I show them I am leaving to take a better deal with another company. Really pisses me off but, I get it.
We have set our # @ 25% we will need to finance, at that amount we should be able to pick and choose the best rate available at the time. Good luck in your saving, 70% is alot to finance to do Live aboard, I personally would shrink my boat or save longer.

[Astro]

So I'm wondering...how do folks make a living while living aboard? I often hear (read) that folks linger somewhere when the kitty gets low, and then move on for another round, but does anyone know ways to generate a reliable, liveable income that meshes neatly with liveaboard sailing? Deisel mechanics and electricians are probably as busy as they like, anyone else?

[zeehag]

astro--i was management in nursing in a post anes care unit, and i also worked bedside in intensive care and emergency room as rn while i resided aboard. now i receive a monthly check from ssdi, as i became disabled while working.

[gixerjen]

well, i'm no financial expert but..... the reason i've got a live aboard is because i can't afford to buy. (and i do not want to line someone else's pockets by renting). not sure if it's different in the us but i've just paid 3k for my boat, now it does need some work (and a 30 footer is too small for two) but could you down scale the dream just a little and buy something a little less nice that needs "work" to make it your cosy little home?

maybe it would be less than your ideal but you could lose the costs associated with the house and live the dream / rough it (who am i trying to kid ) in your boat?

for me, i'd rather go without in some areas, but have a home that's mine, that will go up in value (because of the work i put in) and that i have the freedom to take where ever i choose....

[osirissail]

Originally Posted by Astro

So I'm wondering...how do folks make a living while living aboard? . . .

There are quite a few threads on CF on making money/income while cruising. Cruising is when you and the boat are moving from one location to another fairly often. That situation is not conducive to long term employment unless you can work from the boat on the internet or something similar.
- - Static Liveaboards who stay in one location for several months, a season, or longer can find a job on land just like any living-on-land person.
- - Frequently cruisers will stay "static" for several months or a season and often work in boat stores or the boat repair businesses. Then in the cruising season head out to their next destination.