Question by Steph T: Would it be better to continue to pay on our Equity Line of Credit & our Mortgage or to refinance for 1 loan?
Our interest rate on Mortgage is 5.87%, but we have a variable rate currently at 7.5% on the Equity Line. Now that we have exhausted the Equity Line we are having trouble carrying both payments. Will the payment be lower if we combine the loans and refinance?
Answer by CupCake
I was in the same predicament and decided to refi in order to have one payment. the HELOC is a monster with the interest compounding and no matter what I did, the principal kept getting bigger and bigger… I am so glad I refi’d in order to get the debt under control. I highly encourage you to look into it. You might not get such a great rate like 5.87 but I got 6%.
What do you think? Answer below!
This all depends on the interest rate you can find. However, the way I read your question, you may hve been using the equity line to make your normal mortgage payments. If that’s the case, there is no possibility that you can get a combined loan with affordable payments. If you’ve been able to carry the mortgage without the help of the equity line, then it’s worth exploring.
Probably a higher rate, if you qualify.
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depends on the interest rate you can get right now. use Microsoft Excel or any other financial calculator and plug in the length of the new loan, the interest rate and the amount and get a monthly payment. then compare it to what you are paying now, but don’t forget that the old loan’s payments would have been over before the new loan will be. So unless you are matching the term of the loans, you are probably agreeing to pay less money per month but for a longer period of time.
whatever you decide, be sure to not tap your equity again for a while
finance beginner course, a vertible law of finance is never make short-term debt to long-term debt. it would be a decision base on that principle. if you can possibly avoid it accelerrate paying off your relatively eqiuity loan. perhaps you find a way to earn more money or sell something? only take the action you referred to if you are truly in jeapordy of losing your home to improve your montyly cash flow.
I agree with John M.
obviously if you could refinance into one fixed rate loan the 1st and 2nd that would be your best bet, is it possible is another question?
most important factor will be the equity in the property versus the note value of both the 1st and 2nd if you have at least 20% equity over the notes you should be OK with good credit
anything else without knowing the facts you may not be able to refinance the whole
yes, wil be lower.
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