Please suggest whether or not to refinance my mortgage loan

11 Answers

This is only a suggestion, but if you are going to tack on $3,900 for closing cost plus $5390 for insurance for 60 months, you are not saving anything.  The .25% you think you are getting is being put back on your account in closing cost and insurance.  The $9240 you will be tacking on to your account for another 24 years with interest.  Your best bet would be to concentrate on whittling down the unsecured debt by cutting back on un neccessary buying.  Do not get that extra $5000 you don't need, you need discipline in your money matters.  Young people hurt now or hurt later, there are no short cuts.  You cannot have everything you want right now.  Do without some things.  $30,000 in unsecured debt makes me wonder what that was used for.  You probably have nothing to show for that type of debt.  Just things you wanted.  This might seem harsh, but you are spinning your top if you don't realize that you are spending beyond your means.


You should NEVER refinance your house to pay down credit cards.  In your case, refinancing wipes out 7.5 years of payments.  You'd be starting all over again.  5k (your proposed cash out) divided by 130 (monthly savings from new payment)=38 months.  If you take out that 5k, it will take you 3 years and 2 months to make up.

Since you plan on staying in your house and your cars are almost paid off, default on the credit cards (after the cars are paid off).  You won't need a car loan or a mortgage so your credit score won't matter.  You can then save money.  As for the credit card companies, let them sell that debt to a collector.  You can fight them off with debt validation.

http://www.creditinfocenter.com/rebuild/debt_validation.shtml


I think you guys are forgetting some things. IF the OP can keep from getting back into credit card debt, this will SAVE money, not cause more to be paid in interest. Here\'s why. Taking the $5k and applying it to outstanding credit card debt (which is WAY higher interest) and then paying additional on these other unsecured debts with the savings from the lower monthly house payment will get rid of the credit card debt. Once that\'s gone, the OP can then start making additional principal payments on the house and pay it off at a MUCH faster rate which will, in the end, be a substantial savings.

For instance:

A typical 30-year, $250,000 mortgage at 6% interest is about a $1500 monthly house payment.

If you pay an extra $100 principal payment per month, you could save nearly $52,000 in future interest and pay off the loan four and a half years early.

$250 a month will save nearly $100,000 in interest and pay off the loan nine years early.

$500 a month will nearly $144,000 in interest and pay off the loan almost 14 years early.

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I would proably say \"don\'t do it\". When you add up the interest on the new mortgage until it\'s maturity, you are paying a LOT more for your house. The other reason I would say no is that I always had a no mortgage for other stuff policy. The theory being that if times got tough, I could let the car go, let the credit cards go, but I would always have my house. Even if I had to file bankruptcy I could reaffirm the house and keep it.

Well that theory worked well for me when my income dropped dramatically in 2008 and 2009 and I had severe money troubles.

I settled the cards in 2010, didn\'t have to file bk, and still have my house with it\'s low payment and the original pay off date.

The only way that you should do this is if you did a 20 year or 25 year loan, but to do another 30 year loan after paying on this one for 91 months is probably not wise in the long run. I don\'t know how old you are, but make sure your house is paid off by retirement.


Help Me I appreciate the input! What you are saying has a lot of validity to it. Not behind on anything so I don\'t think I can go the route you\'re talking about, but will have two vehicles paid off in three mos. so we could take that and apply towards our debt. Boy, desicions, desicions!!!!! Also, I had mentioned the closing costs, and we will have the additional cost of about $90.00/mo towards mortgage insurance, that goes away after 60 mos.

I also looked at the amortorization table for our current loans and added the interest left for both loans and it is actually less than that of the new loan through maturity. My wife is like you and says no! With all my figuring which is giving me a headache, I am now leaning towards not doing the new loan. Will let you all know Monday, what we have done.


Was also thinking that the credit cards paid off will free up additional cash going toward the other debt and we stick to it, I see it gaining momentum as time goes along. Thanks guys for your input, I really do appreciate it. I\'ll keep you all updated as to our status as time goes on.


I would do it. The key is to take that $5000 and pay it on your other debt. Also, the additional $130 you\'re saving monthly needs to be applied to your debt. Once you get that debt paid off, you can then pay additional principal on your mortgage with each month\'s payment. THAT is what will really amount to a huge savings for you in the long run.

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I am not an attorney. I am not offering legal advice. The information and ideas I share are my opinion only and do not necessarily reflect the opinion(s) of the owners of this website.

Looks as if we are leaning towards doing this. We\\\'ll pay off two of the credit cards and have about $200.00 extra each mo. to pay on the others. We plan on living here a long time anyway, God willing. Will also start an emergency fund so that we don\\\'t get in this predicament again. Thanks Anna for the input!


In such a situation, as I said earlier, you can go ahead and refinance your mortgages into one single home loan.Anirban


Believe it or not, the value according to our new appraisal has actually gone up and that is the reason we can finance at this time. And we do plan on staying here for some years to come.


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