Question by BG: Cons to refinancing mortgage for more than I currently owe?
I’m currently 6.5 yrs into my mortgage. Thinking of refinancing for 1.5 points less than current, but adding about 30% to what I currently owe to pay off car, credit cars, and 2nd mortgage. I haven’t had the appraisal yet, but the mortgage company says my house should be valued a bit higher than the new mortgage. I’m trying to figure out what the drawbacks are. The mortgage company says it’ll save me about $ 500 a month and I can get that other stuff paid off, but I don’t have the brain to know if it’s a good deal.
Answer by v b
If you successfully pay off the loans:
You pay a lower rate on the car and credit cards. This saves you money (see below).
Within limits, this might still qualify as a mortgage debt on your tax return without being added back for AMT.
You empty your credit cards and use them again.
You focus on the $ 500 a month “savings” and don’t pay as much on the part of the loan that used to be the car payment and credit cards and stretch the payments out over the life of your mortgage.
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