I have a mortgage for about $68,000 at 6.875% 30 year fixed and an auto loan for $10,000. Should I refinance?

Deal Score0

I would like to consolidate and make only 1 payment per month (which is ideally less than my current combined two payments). Is now a good time to refinance? I would consider a 7 year ARM to get a lower rate since I plan on selling my home when I am finished with grad school.

  1. Reply
    January 21, 2011 at 10:51 am

    I’ve been in the mortgage business forever so I and my kind would benefit if I told you yes, but no. Don’t refinance.

    Firstly, ARM rates are currently higher than Fixed because of volatility with the LIBOR. Second, unless you are having major money problems NEVER finance an auto loan in to your mortgage. Sure it would be nice having only one bill but your turning your car loan in to a 30-year debt.

    Finally, If you refinance now for a rate of say, 6% you are going to need to pay that payment for close to 5 years before you realize the cost of the loan (closing costs) as savings. You mention you are going to sell the house as soon as you are out of Grad School. I assume that is roughly 3-years? It’s not worth the time, effort or money.

    Stay put.

  2. Reply
    January 21, 2011 at 11:06 am

    Well Suze Orman would have a fit if she heard you were planning to use your property equity on a car! It really doesn’t make financial sense to give good money towards bad. That car isn’t even worth what you paid for it. One of the reasons we’re in this financial mess as a country is because some of us – maybe a lot of us used the equity in our homes to buy other stuff! And now we’ve lost value and that equity is no longer there. So you might consider refiancing the car loan against something else, or at least postponing until our economic situation improves.

  3. Reply
    Kevin R
    January 21, 2011 at 11:07 am

    I believe you should wait until after the election. But before the winner takes office. With rampant deficits over the last 30 years, it is possible hyper-inflation could result. I’m not a fear monger so don’t think it. The Fed, at some near point, must lower interest rates to regenerate stability in the economy. Then, a massive increase, to regulate, and recapitulate bond, and interest rate futures. Just to make sure everybody is shaken out who caused this mess.

    So, to answer, wait. Interest rates are going lower. Go fixed on the mortgage, trust me. Rates are going to be higher in 36 months.

  4. Reply
    January 21, 2011 at 11:45 am

    Do not consolidate a car into your house. If you cannot pay your car loan, do you want them to take your house? Best thing to do is to wait and see. The Fed is probably going to cut rates so this will help you refinance. Pay off the car loan once you know what you are doing with your house. And stick to an old fashioned 30 year fixed rate mortgage.

  5. Reply
    January 21, 2011 at 12:21 pm

    You are at the point in your mortgage when the monthly payment is mostly principle. Struggle a bit longer and that mortgage will be paid in full.

  6. Reply
    January 21, 2011 at 12:45 pm

    Obviously you are struggling to meet payments on the car. That said you are likely struggling to meet other debt payments period. You’re likely thinking that if you eliminate one payment you will free up your money and can meet your debt payments while focusing on your studies. Struggling to meet payments may not be an option depending on the degree of stress you’re dealing with. Less anxiety will help you protect your most precious relationships as well.

    Your first and foremost option is to find another way to pay off debt on the car.

    1. Do you have a vaulable possession that you can sell using the proceeds to refinance/pay down or payoff your car?

    2. Can you rent out a room?

    3. Can you take on a part-time job or run a small business that is more likely provide the funds you need to meet debt payments?

    4. Can you find someone who is willing to take over car payments while you buy a car that runs out of pocket?

    5. Will your parents or other family member give you a small loan to pay off the car or keep up with payments?

    6. Is it time to tap into the reserves?

    If these options are not doable then and only then should you consider cash-back or cashout home refinancing. Using the cash to payoff the car as well as other debt can give you peace of mind.

    If your credit is not bad you can get a loan rate as low as 5%.
    Not only can refinancing lower your interest rate but it can also lower your monthly home mortgage payments. This is ideal for those who need immediate debt relief. Your next challenge would be finding a good refinance deal at lowest refinance rates.

    Regarding how to shop home loan refinance programs at low rates consider the following sources…

    Leave a reply

    Register New Account
    Reset Password