Posted on: 21st Oct, 2009 03:54 pm
we owe $74,000. on our first mortgage, of which we took out in 2003, at an interest rate of 5.5%. we owe over $28,000. on a home equity loan, of which we took out two to three years ago, at 8.70%, both at a 30yr. fixed.
we have about $15,000. in credit card dept of which the interest rate is going up to 11.90% as opposed to 9.90%.
we're thinking about refinancing both the first and second and borrowing enough to pay off the credit card dept. for a total of $118,000. at an interest rate of 6.29% for 30yrs. fixed. from what we were told by the bank, that we're thinking about refinancing with, it won't be a mortgage loan, it'll be a home equity loan so we'll be responsible for paying the taxes and ins. at the end of the year because we won't have an escrow to do it for us. i've never heard of that kind of a loan.
my dilemma is, our interest rate will be a bit more than our first original loan, but less than our second we have now and alot less than our credit card rate. we've been paying on the first original mortgage now for about 11 years.
i'm really confused. any info. or advice would be greatly appreciated!! i hope i explained all of this good enough to understand it. thank you.
we have about $15,000. in credit card dept of which the interest rate is going up to 11.90% as opposed to 9.90%.
we're thinking about refinancing both the first and second and borrowing enough to pay off the credit card dept. for a total of $118,000. at an interest rate of 6.29% for 30yrs. fixed. from what we were told by the bank, that we're thinking about refinancing with, it won't be a mortgage loan, it'll be a home equity loan so we'll be responsible for paying the taxes and ins. at the end of the year because we won't have an escrow to do it for us. i've never heard of that kind of a loan.
my dilemma is, our interest rate will be a bit more than our first original loan, but less than our second we have now and alot less than our credit card rate. we've been paying on the first original mortgage now for about 11 years.
i'm really confused. any info. or advice would be greatly appreciated!! i hope i explained all of this good enough to understand it. thank you.
hi mamaspewter,
the credit card debt needs dealing to. aside from the refinancing aspect, which could certainly work provided you have sufficient income and equity to allow you to increase to total mortgage and still cover the repayments, you could look at ways to consiolidate the credit card debt. there are places that specialise in credit card debt consolidation over 10k and you can get free quotes from them online. if you live in the us (which i'm assuming you do) there's a site in my sig that might be of use to you.
the issue with refinancing is that you may incur penalties. if you are looking to effectively get a new loan to encompass the two existing mortgages, you may have some pretty steep break fees imposed by your lender if you are currently on a fixed rate (which it sounds like you are). how long do you have to go before your fixed rate term finishes?
here's what i'd suggest (i'm sure other forum members will have suggestions as well):
1. find out what fees (if any) will be charged for breaking your existing loans and establishing a new loan at a lower interest rate.
2. get a quote for a credit card debt consolidation loan and see what that will do to your card repayments.
it may be more cost effective to consolidate the credit card debt without touching your mortgages. if you can avoid break fees then so much the better, go ahead and refinance the lot, but if you're going to take a cash hit to refinance the mortgages it may not be worth it.
the credit card debt needs dealing to. aside from the refinancing aspect, which could certainly work provided you have sufficient income and equity to allow you to increase to total mortgage and still cover the repayments, you could look at ways to consiolidate the credit card debt. there are places that specialise in credit card debt consolidation over 10k and you can get free quotes from them online. if you live in the us (which i'm assuming you do) there's a site in my sig that might be of use to you.
the issue with refinancing is that you may incur penalties. if you are looking to effectively get a new loan to encompass the two existing mortgages, you may have some pretty steep break fees imposed by your lender if you are currently on a fixed rate (which it sounds like you are). how long do you have to go before your fixed rate term finishes?
here's what i'd suggest (i'm sure other forum members will have suggestions as well):
1. find out what fees (if any) will be charged for breaking your existing loans and establishing a new loan at a lower interest rate.
2. get a quote for a credit card debt consolidation loan and see what that will do to your card repayments.
it may be more cost effective to consolidate the credit card debt without touching your mortgages. if you can avoid break fees then so much the better, go ahead and refinance the lot, but if you're going to take a cash hit to refinance the mortgages it may not be worth it.
WHAT?!?!? There is no reason to take out a home equity when a mortgage will be lower rate wise and you can keep your escrows, besides rates are currently a tad bit lower than what you are being quoted unless you have low credit scores. The mortgage needs to fit all of your needs and it needs to do it long term. Your lender needs to listen to you and put you in the loan that makes you happy and that fits your long term goals.
I'd like to think I am good at giving second opinions and would be happy to look at your situation.
[Email address deleted as per forum rules. Thanks.]
I'd like to think I am good at giving second opinions and would be happy to look at your situation.
[Email address deleted as per forum rules. Thanks.]