To refinance or not to refinance

You will be able to get a mortgage refinance only if you’ve equity in your property. While you refinance your mortgage, you’ll be liable for paying closing costs. You can offset this closing cost only when you stay in the property for the next 7-7.5 years. As you’re getting lower rates, it will be a good option to refinance the loan. The cash out amount can be used to pay the unsecured debts. In my opinion, it will be a good option to refinance the mortgages.

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.

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

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!

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.

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.

Ok..hate to be the spoiler here. I am a mortgage underwriter. The long and short of it is this. The only TRUE way to see if you are saving money in the long run is by looking at a rate and term refi to another rate and term refi. When you take cash out, there really is NO way to figure it all out. That being said, if you are a disciplined person, do it. BUT most people I have seen over the years are repeat offenders (inlcuding ME) I have refinanced more than once to pay off my debts...I have used my home as a bank account. What started out 10 years ago as a $207K loan is a $320K loan and I really have NOTHING to show for that. Meaning, I did not re-construct my home other than doing some repairs and adding central air, irrigation and finishing off my basement. SO that $207K mortgage having been paid on for 10 years ought to be down significantly and what have I done...I have secured my unsecured debts and increased it and am back to about 28 years left to pay on it with an additonal $113K in debt...WTH is wrong with me...I dunno...I had to keep the credit good and had to keep up with my lifestyle...even though I COULD NOT....so now I have made a mess.

I WOULD NOT DO THIS IF I WERE YOU....I just let two cards with about $45,000 between them go. I am ecstatic. I got offers on them at 30% and have settled (payments to be made)...WHO CARES ABOUT MY SCORES...I am free from this debt. Think about doing that...It can be done. It ought to be done. Negotiate and pay them off without attaching more debt to your home. You will be thankful. DO NOT REFI.

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.

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.

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.