Refinance For Better Debt Control?
I am in a position to take out some equity out of my house to pay off our car ($10000@4.99%-3yrs. Left) and Credit Card($17,000@1.9%until debt is cleared)and Current mortgage($80K@4.75%variable escalating mortgage) for a clean slate except for new mortgage (113K@6.5% over 30yrs.) and Student loan $17k@9%) Saving cash flow of about $420 a month. I be paying 1.2 points to do it. I know its not the most attractive offer but there is no PMI and I can reduce effective interest to 4.7 if I pay bi-monthly. So do I do it?
"car ($10000@4.99%-3yrs. Left) and Credit Card($17,000"
I would not advise securing a car debt and currently unsecured credit card debt with your home.
Put the closing cost $$ toward the credit card.
[addsig]
In that situation it sounds good to me ;just try not to permanently settle with lower payments ( I struggle with that myself). I would recommend then getting the 3 or 5 yr arm unless you think you will stay longer ... depending on your credit I would shop around a bit more for more favorable terms if you decide to use a 30 year....
Im my experience what one bank considers fair credit another lender considers good credit and crfedit unions tend to have much fewer tiers of rates...[ Edited by nic3456 on Date 01/28/2005 ]
Thanks Nic,
I plan on shopping some more but I needed a sound board to talk through my idea. I hope to get better rates and terms.
Everyone here is giving great advice, what it boils down to is what your need today, what will help you enjoy your life? If you are living paycheck to paycheck, what good are the rates on any of the money you currently have financed. I see people every day that brag about how they have a 5% mortgage and charge their groceries because they are over extended, what good is seeing 5% on a mortgage statment if you are living hand to mouth. No one knows your situation like you do, you are the one that pays the bills each month, you know what is left over.
If you know that you will be in this home short term, the refi in an ARM is a no brainer. If you are saving nothing now and the new loan will save over $400 that is life changing.
I would recommend taking some additional cash and giving yourself some cushion so in the time if need you are not swiping a credit card.