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I have 2800 credit card debt and 10,000 student loan debt. (this is the only debt that I have)
Do you recommend me to refinance my mortgage amount 60k ( current mortgage interest rate is 6,5%)to a 30 year loan and get that extra cash to paid down my credit card and student loan?
Or should I refinance my house to 15 year and just pay off my credit card and student loans at a Slower pace?
I probably will be moving from my current home within next two years (still not sure if I am going to sell my current house or keep it as a rental)
Get additional income to pay off the school and CC debt.
Assuming that you're already paying *something*....
(lets call that $300 per month... OK?)
Another 1.5 years will reduce that $12,800 by $5,400 (18x300)
The balance of $7,400 /40 (1.5 years) = $185 per week
That's a part time job.
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All that said... you can probably do better than 6.5% on the mortgage.
Explore that... but NOT for reasons of paying off the other debt.
Location: Chapel Hill, NC, formerly NoVA and Phila
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What is your interest rate on your credit card? What is your interest rate on your student loan? Can't you pay off the credit card with extra money you have? It shouldn't be that hard to raise $2800. Your student loan rate may be lower than your mortgage. If you are planning to sell in 2 years, it may or may not be worth it to refinance. Find out what the costs are, what rate you can get, and how long it would be until you "break even" (how long it takes for the lower refinanced mortgage rate to pay off the cost of getting the loan).
A refi costs around $3-4k in my area. I wouldn't refi if you are planning to move or rent it out in 2 years - you'll end up spending more than you save.
I thought there were a lot of lenders doing no closing cost refi's but I could be wrong on that. Normally I would say you should refi regardless of the other debt, but that time frame is pretty short til you move.
You should just pay off the debt, it's not a huge amount a doable with your income. Don't fall into the trap of shifting the debt around and feeling like you accomplished something by shifting it to a lower interest rate instead of paying it off.
Student loan debt is typically very low interest (my husband's was around 3%), plus you can write off the interest on your taxes, even if you don't itemize. So unless your interest rate is abnormally high, I wouldn't accelerate payment on that unless all other debt is gone, and definitely not by refinancing the house.
Given that, $2800 in credit card debt is not enough to do a refi over. However, it is probably a high interest rate, plus you can't write that interest off, so while I wouldn't refi the house for it, I would still focus on paying that off as quickly as possible.
Finally, as others have said, unless you have the option of a low cost or no cost streamline refi, I wouldn't bother with the refi if you are planning to sell in 2 years. But if you were going to keep it as a rental, I would consider doing a 15 year refi, since your payment on a 3%-3.25% interest rate is probably about the same, or even lower, than the payment on a 30 year at 6.5%
You could do a no cost refinance and it would be worth it. I'm currently refinancing from 4.625% to 3.875% 30-year fixed no cost refinance. Even though we plan on selling in two years we'll still save over $100 a month in interest and it'll cost us NOTHING. Of course it's about a .25 point higher than if we paid costs, but the break even point on that might be 7-8 years.
Explore a no closing cost option. The only issue might be the amount of your mortgage. My broker won't touch any mortgage less than $120k.
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