Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What's the other option to get the $70k we need now in lieu of cash out refi? Thanks
Maybe a Home Equity Line of Credit. You won't be out $18000 to borrow $70,000.
Answer the following and I'll do some calculations.
How much are your CC balances and the interest rates on each and how much are you paying each month toward the balances?
How much do you owe your 401(k)? What interest rate? How much a month are you paying toward the balance owed? Are the payment coming right out of your pay.
Maybe a Home Equity Line of Credit. You won't be out $18000 to borrow $70,000.
Answer the following and I'll do some calculations.
How much are your CC balances and the interest rates on each and how much are you paying each month toward the balances?
How much do you owe your 401(k)? What interest rate? How much a month are you paying toward the balance owed? Are the payment coming right out of your pay.
I sincerely appreciate that. Very nice of you. I'll just recap our house situation first.
We have two houses, one primary and one rental.
Primary residence:
mortgage balance $272k
Appraisal ~$550k
Monthly payment w/ taxes & insurance $2,300
30 year term w/ 29 years left
Current interest rate 3.6%
Secondary Resi
mortgage balance $288k
Appraisal $ $440k
Monthly payment w/ taxes & insur. $2,800
30 year term w/ 15 years left
Current interest rate $ 4.875
CC debt is $40k @ bet. 13-15%
wife 401k loan is $17k
my 401k loan is $40k
We pay about $1,500 month toward the cc debt.
401k loan comes right out of pay.
I averaged your CC interest rate at 14%. $1500 per month gets the $40k paid off in 32 months. The interest is $8160.
See if you can get a Home Equity Line of Credit with a $40,000 limit. Interest rates are averaging 4%. Maybe you can do better. At 4% paying $1500 a month on the HELOC you pay it off in 28 months but the interest only costs you $1962. A HELOC probably won't cost you more than a thousand or two in closing costs. A lot better than $18,000 because you won't have additional impounds for taxes and insurance.
What happens with a new mortgage is you pay a year's tax and insurance up front and then you pay for tax and insurance monthly for the following year.
Let the 401(k) debts continue to be paid out of your pay. Your paying yourself back so it doesn't make sense to pay a mortgage company.
Leave your mortgages alone. Refinancing with a new mortgage would be a sucker bet.
Once the HELOC is paid off you can take the $1500 and apply it to the 401(k) debts. Preferably your wife's first because $1500 will pay off $17000 in little more than a year. Then pay the extra $1500 to yours.
Sure, it could take 5 or 6 years to get out from under the debts. It won't be easy but it will be a lesson learned.
Wait, I thought of one more option. Sell the second house and pay off all three debts. Then take the $1500 per month and add it to your primary house payment. You'll have that house free and clear in 12 years.
I guess the "other" costs are really not the closing costs?
Find a lender who does not charge an origination fee, but rather a flat fee. You're being charged $6k by the lender for the loan. Shop around locally or negotiate that origination fee down. Those closing costs seem crazy high to me for a refi. I don't know what state you are in but I don't understand why you'd be charged a transfer fee on a refi. Do yourself a favor and call a local lender. You'll get a much more accurate closing cost estimate than working with an online mortgage company.
I averaged your CC interest rate at 14%. $1500 per month gets the $40k paid off in 32 months. The interest is $8160.
See if you can get a Home Equity Line of Credit with a $40,000 limit. Interest rates are averaging 4%. Maybe you can do better. At 4% paying $1500 a month on the HELOC you pay it off in 28 months but the interest only costs you $1962. A HELOC probably won't cost you more than a thousand or two in closing costs. A lot better than $18,000 because you won't have additional impounds for taxes and insurance.
What happens with a new mortgage is you pay a year's tax and insurance up front and then you pay for tax and insurance monthly for the following year.
Let the 401(k) debts continue to be paid out of your pay. Your paying yourself back so it doesn't make sense to pay a mortgage company.
Leave your mortgages alone. Refinancing with a new mortgage would be a sucker bet.
Once the HELOC is paid off you can take the $1500 and apply it to the 401(k) debts. Preferably your wife's first because $1500 will pay off $17000 in little more than a year. Then pay the extra $1500 to yours.
Sure, it could take 5 or 6 years to get out from under the debts. It won't be easy but it will be a lesson learned.
Wait, I thought of one more option. Sell the second house and pay off all three debts. Then take the $1500 per month and add it to your primary house payment. You'll have that house free and clear in 12 years.
Thanks so much so let’s say we didn’t do cash out wouldn’t a straight refi make sense with the interest rates we currently have.
let’s say we didn’t do cash out wouldn’t a straight refi make sense with the interest rates we currently have.
On your current loan balance of $272,000 at 3/6% your P+I is $1260 per month. Total interest for the next 29 years is $166,626.
On a new loan of $272,000 at 2.8750% you P+I is $1128 per month. Total interest for the next 30 years is $134,263.
That might look attractive but it gets less attractive when you add in the $10,000 in interest you've already paid in the first year of the current loan plus what it cost you to buy that loan plus what it will cost you to buy the new loan.
Besides, a reduction in monthly payment of about $130 isn't going to help you with the other debts that total $97,000.
Thanks a lot adjuster. How about straight refi on our other home that has 4.875% interest rate down to about 3.2%. Closing cost about $14k
Starting to think that refing is not the smartest thing to do on either house. We pay several hundred more towards our mortgage payment every month so that may help combat the 4.8% interest rate. My credit union is offering HELOC @ 2.2% fixed.
Last edited by Mstrlucky74; 03-13-2021 at 03:18 PM..
Thanks a lot adjuster. How about straight refi on our other home that has 4.875% interest rate down to about 3.2%. Closing cost about $14k
That makes slightly more sense but only if you refi into a 15 year mortgage to match the remaining life of the existing mortgage. It reduces your payment by about $240 and reduces the interest over the next 15 years from $118,580 to $75,000. Could be less attractive if you are rolling a substantial amount of the closing costs into the loan.
Quote:
Originally Posted by Mstrlucky74
Starting to think that refing is not the smartest thing to do on either house. We pay several hundred more towards our mortgage payment every month so that may help combat the 4.8% interest rate. My credit union is offering HELOC @ 2.2% fixed.
That makes my other suggestion a lot more feasible. $40,000 pays off your high interest credit card debt. You pay the HELOC off at $1500 per month and it's paid off in 2 years and 3 months. The interest cost is only $1034.
Leave the 401(k) debts as is and you can still refi the second house if you want to and can find lower front end costs.
That makes slightly more sense but only if you refi into a 15 year mortgage to match the remaining life of the existing mortgage. It reduces your payment by about $240 and reduces the interest over the next 15 years from $118,580 to $75,000. Could be less attractive if you are rolling a substantial amount of the closing costs into the loan.
That makes my other suggestion a lot more feasible. $40,000 pays off your high interest credit card debt. You pay the HELOC off at $1500 per month and it's paid off in 2 years and 3 months. The interest cost is only $1034.
Leave the 401(k) debts as is and you can still refi the second house if you want to and can find lower front end costs.
Thanks. What do i owe you...jk. All the best
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
