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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: cash out refinancing||Date: 5/23/2001 1:15 PM|
|Author: aja91||Number: 72180 of 309605|
First post hope it works.
It did. :-)
I recently had my home appraised and it seems that after only 1 1/2 years the value has increased some $45,000 from $63,000 to $105,000. Of course there was some elbow grease involved. I am in the process of refinancing and was wondering if it would be better to cash out at 7.125 and pay off about $14,000 worth of debts (interest on that is no lower than 14%) or to do a home equity loan at 7.99 and have it payed off in under five years. Any suggestions?
I would do the refinance (hopefully you are getting a pretty significant rate reduction if you originally financed 1 1/2 years ago!).
However, as far as your suggestions on paying off the credit cards, I would do neither of the choices you suggest. In both cases you are essentially making your home collateral for the "stuff" on the credit cards. More importantly, you may very well feel that the freed up cards would be "found money" available to spend. Instead, I would take the amount you save monthly on your mortgage after refinancing and apply it toward your credit card balances. Look for offers which allow you low interest rates for balance transfers to minimize the amount of interest you pay on the cards.
Hope this helps.
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