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My husband and I are needing to refinance (balloon coming due in August).
Since the rates are low and will go up in March, we are doing it now.
We owe $188,000 on our mortgage (house is worth at least $290k) and we also have a HELOC (currently at 3.9%) of approx. $32k.
After being unemployed last year, we also have a credit card balance of $13K (rate going up in July) that we would also like to roll into the mortgage (a cash out for both).
My question is, is this a "smart" thing to do (rolling both the heloc AND the credit card debt into the refinance)?
Thanks for your help!
p.s. my salary is basically covering our mortgage and our kids' tuition, plus some utility bills, etc.
my husband is self employed, so his income goes up and down like the weather!
p.p.s. my Credit score is 740, and I think my husband's is slightly lower, but still above 700.
I think it is a wise move but others will probably disagree. At the end of the day you owe $188k for mortgage, 32k for heloc and 13k for cc which totals $233,000. The best place to carry debt is where you can deduct the interest. And, the rate you can get on a new mortgage is probably better than the cc interest rate.
If you do add the CC to the mortgage, make sure you get rid of the CC so you dont run up a new balance.
I would not roll unsecured debt(credit card) into a secured loan.
The rate on your HELOC is good but if it will make you sleep better at night refinance both your 1st and 2nd mortgages into 1 with a fixed rate. I would try to keep the 2nd open just because it is nice to have in your back pocket in case of an emergency if other funds are not available to you which i am assuming you don't have being that job los last year is the reason you have a CC balance.
Thanks.
Yes. I was wondering about the CC thing. BUT, with bills, taxes, etc. there is NO way that we'd be able to pay off the $13k by July (when the zero rate goes to crazy).
I'm not sure that we can keep the heloc open. (I know that when you roll a heloc into one mort. refinance that you can't take out any other equity for a year, which might be fine if "nothing happens", i.e. accident, unemployment, etc.)
Kinda missing my "single" days of no debt (albeit, no credit)! ;-)
My husband and I are needing to refinance (balloon coming due in August).
Since the rates are low and will go up in March, we are doing it now.
We owe $188,000 on our mortgage (house is worth at least $290k) and we also have a HELOC (currently at 3.9%) of approx. $32k.
After being unemployed last year, we also have a credit card balance of $13K (rate going up in July) that we would also like to roll into the mortgage (a cash out for both).
My question is, is this a "smart" thing to do (rolling both the heloc AND the credit card debt into the refinance)?
Thanks for your help!
p.s. my salary is basically covering our mortgage and our kids' tuition, plus some utility bills, etc.
my husband is self employed, so his income goes up and down like the weather!
p.p.s. my Credit score is 740, and I think my husband's is slightly lower, but still above 700.
There are a lot of variables to consider. I will respond were I in your position.
I would NOT move my HELOC. This is at 3.9%. But more than that the monthly payment is calculated via average daily balance. You be be giving up both of these advantages. You also want to keep them separate for other reasons--you can use the HELOC as a shock absorber of shorts--something you dare not do with your home.
How about we assume the house is worth $260K (10% less than your claim--just to be conservative)? Adding $13K of CC (must higher rate) would be smart...under ONE Condition. You and your husband swear to each other NEVER to use the house for credit card payments EVER again. A terrible habit that has destroyed millions of family nest eggs in the past four years.
So you will have a mortgage of $201K +/- closing costs, insurance, etc. or about $205K. You will have a $32K HELOC.
This means you will have only $23K in true equity in the home after the refi: $260K-$205K-$32K. You and your husband should emerge from the refi with a renewed sense of purpose to paydown this debt. Add a monthly payment a year and double your HELOC. This will give you breathing room and shorten your payment horizon (if 30 year FRM to 23-24 years).
Good Luck!
S.
P.S. Yes, you are doing a refi on the existing mortgage. However, you and husband need to think of this as a renaissance-a rebirth into two financially prudent homeowners. Cut your cc bills to $100 a month...pay cash for the rest. When one pays cash, things seem more expensive as you literally watch your monies transfer into the hands of another. It is the analogue to the slow high. Credit cards are the junkie's high. The intelligence of your refi will not end with the closing but in the many years afterwards as you get closer to actually owning the home!
Yes. That makes sense.
Wasn't really convinced moving the HELOC over was a good or the best idea.
The ONLY reason why I/we were considering a cash out at THIS time was/is due to the lower current interest rates NOW, vs. what they'll probably be - higher - in August when our balloon comes due (and when the zero rate on the cc ends -- have been paying WAY more than the min. on that, so it's chipping away).
We never typically carry balances on our credit cards. Until last year when we were hit with a sunami in Jan. of my not having a job, my husband's business being slow (typical for that month), paying our property taxes, mortgage, our son's school (which we originally didn't account for), etc.
Our mortgage payment is only $1060 a month, FAR less than avg. and FAR less than what rent would even be.
$300k. That is good. You would do best to keep two estimates: one is the estimated market value and the second should be 90% of that. The latter for planning purposes. Better to keep conservative.
Sounds like you are doing well with the house.
If the bank did the appraisal, may they are willing to increase your HELOC.
A larger HELOC gives you more options. However, the larger the HELOC the more opportunities for abuse. If you feel you can use the HELOC as a strategic play, then consider increasing it. But discipline must increase with its increase as well.
S.
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