Can refinance my first mortgage to pay off debts is a good thing?

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Times are tough, and I pay a huge sum of credit card debt and said that I did not have enough equity a HELOC because my house was worth it because of the seizures in my area. I had to tell me my best option 2 is my 1 Mortgage Banks, which would save me a better chance of winning because my first month refinancing refinance Hyp. they would be able to approve me for a bigger loan, in exchange for paying your credit card over to my house for 15 years. I have the option of a 20 or 30 years years. Is this the best option? My credit card payments are more than 15% interest, which would be to refinance my 5.50%

  1. Reply
    April 30, 2011 at 11:33 pm

    Just remember, if you take more equity out on a refi, you are trading unsecured debt for secured debt.

  2. Reply
    April 30, 2011 at 11:35 pm

    If you are meeting your monthly mortgage payments now, do not make them larger just to pay off credit cards. You will in effect be stretching out your credit card payments over the next 15-30 years, making them much more expensive in the longer term.

    If you don’t pay your credit cards, you get bad credit. If you don’t pay your mortgage, you are homeless. I’d rather have bad credit.

    Get on a real plan to pay off your credit card debt without involving your home and mortgage.

  3. Reply
    Kevin C
    April 30, 2011 at 11:48 pm

    Read “The Total Money Makeover” by Dave Ramsey. He addresses situations like this. Short answer is no. Cut up the cards, never use them again and live on rice and beans to pay off the cards. Also, think about this. If you can pay your mortgage now but miss a few credit card payments what happens? If you refinance and then can’t make your house payment what happens?

  4. Reply
    May 1, 2011 at 12:47 am

    The two banks recommendation that you refinance is contradicted by the fact that you state that you don’t have enough equity to qualify for a HELOC. If you don’t have enough equity to qualify for a HELOC, it seems you wouldn’t have the required LTV to qualify for a refinance. I recommend that you contact a realtor who has a For Sale sign up on your street or one nearby, call them and explain that you are not interested in selling at this time, but could they please provide you with some comps of properties sold in your area within the past six months. Note: I did this and the Realtor had no problem helping me out. I did tell him that if I sold in the future, that he would be on the top of my list of brokers I would list with. Once you have the comps in hand, you will know how big of a hit you have taken in the value of your house. Do not take the bank’s valuations of your house to be factual. Challenge them with the comps obtained from a Realtor, provided that you are not in fact totally upside down on your equity. If the equity is greater than you thought, I would go back to the bank(s) armed with the comps and try to obtain a HELOC for the greatest amount you can qualify for. Only refinance if you can reduce your interest rate resulting in a lower monthly payment with the side benefit of a HELOC. The interest on a HELOC is tax deductible in most cases, so you could pay of your high interest credit card load and end up with a much smaller monthly payment.

    And if you are successful at obtaining the refinance or HELOC, put some of those credit cards in a drawer and stop using them. As long as you have them on you, you WILL use them. Good luck and I hope my suggestions help.

  5. Reply
    May 1, 2011 at 12:50 am

    refinance your 1st mortgage to a point that you can afford the monthly payment. you will save 10% interest rate which is a lot. just make sure you can afford the new mortgage.

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