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I am pondering over whether to refinance and take cash out to pay off debts.
My current mortgage has approx. 135K balance - 5.875% 30 year. I am about 6 years into the loan. My current property value is 245K.
I have a HELOC with a balance of 68K at 7.5%. I currently pay 500.00 monthly.
I have other credit card debt totaling approx 22K and currently pay at least 300.00 - 400.00 a month.
I was investigating taking cash out to pay off the both HELOC and the credit cards. I have been quoted an offer of 5% on 30 years on 225K. My FICO is currently 710.
My payments would increase from 1139.00 to 1500.00 a month.
Not sure if this is the right thing to do or if it is the right time. Is it speculated that rates could drop again?
Any advice would be wonderful. Have kids to educate in the near future and thinking that freeing up the cash flow and consolidating debts would be smart....
Last edited by sessc; 01-06-2009 at 01:07 PM..
Reason: Added info
that's 850...and that doesnt include your mortgage payment which is probably ANOTHER 850 not including taxes/ins
I would say your total monthly obligation is around 1900
I don't completely understand what you mean. Maybe I was not totally clear.
My current mortgage payment is 1139.00. If I refinance to include my HELOC and Credit card balances, my mortgage payment will increase to approx 1500.00 or 1600.00 - with tax and ins.
That will eliminate the 500/mo for HELOC and 350.00/mo for credit card debts.
Just wanted reassurance that this is a smart move.....refinancing to consolidate debt.
Will you be cutting up your credit cards after you pay them off? If the answer is NO, then you'll probably just charge them up again and then where will you be? Also you'll be turning what is supposed to be a short term debt into long term debt and will consequently pay more for financing over the long run. Sushi made a very good point as well.
Any advice would be wonderful. Have kids to educate in the near future and thinking that freeing up the cash flow and consolidating debts would be smart....
Okay, here's a bit of advice. Parents have no obligation to give their children a free ride through college. Tell your kids that you're not paying for it and that they can get grants and loans instead. If nothing else, it will teach them the true value of an education and instill a sense of financial responsibility in them. Besides, it's not that difficult to put yourself through college, despite what some people say.
Thanks for the advice, but unfortunately, I am not referring to college. We live in an area where public school education is below par so I am having to pay for parochial education. Grade school has been affordable, but high school will cost me the same per child that I have been paying for all 3.
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