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jessamyn822 · Joined: 14 Mar 2008 Posts: 1 1.38 Dollars($)

My husband and I have gotten in trouble with credit cards. He has been ill and in and out of the hospital so our income was less than normal. We were thinking about doing a cash out refinance. According to the mortgage broker our loan would be an FHA (it is not now), the interest rate would go from 5.75% to 6.5% and our payment would go from 1,165 to 1,550. We wil have to pay for mortgage insurance and about $5,000 in other fees. I was wondering if this was a good loan or if there are better options out there for us. Our home is worth $220,000 and we currently owe $150,000 and were hoping to cash out $30,000.

gmakerley · Posted: Fri Mar 14, 2008 9:10 pm Post subject:

i think you are doing pretty well with that loan, though you could probably get a lower rate these days. as long as you are committed to paying off your debts and not creating new ones, this will make sense for you.

even with the increase in rate, you will still be at a good rate.

helping_user

Welcome Jessamyn.

Since your income has been less than the usual figures and you have been into trouble with credit cards, therefore, I suggest that you don't go for cash-out refinance. The reason is, it will raise your payment by about $400 which may lead you into further financial problems. Also, you'll have to pay a lot of fees too. Have you thought of going for a debt consolidation program? because if you are refinancing just to pay off the cc debts, then I think consolidation may be a better option.

Alternatively, you may consult a credit counselor who will help you manage your finances better through proper budgeting and limited spending. I think this will be even better than going for consolidation or cash-out refinance.

You may contact credit counselors associated with the National Foundation for Credit Counseling at http://www.debtadvice.org/takethefirststep/locator.cfm .

Let me know what your thoughts are.

Thanks.

Jeanette · Posted: Sat Mar 15, 2008 5:05 am Post subject:

Welcome to Mortgage Fit,

As Gmakerly stated, you are currently in a good loan right now. You will be going deeper in debt if you refinance with FHA at higher rates. You can wait it out to see if the rates will go down. You probably also need to find some other lender that can offer you a better rate since the rates are dropping right now. You must do it as soon as possible now because the rates will go right back up if you do not take action.

Good luck,

Jean, SLO
Representative
Union MOrtgage Bankshare Group

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Cash out refinancing or is there a better option?