Question by Johnnie: Should I refinance my mortgage or pay off revolving debt?
Should I refinance my mortgage, which will save me $ 400 per month by combining a costly 9.99% home equity loan with my primary, or use the $ 10000 I need to close to pay off my credit card debt (which would pay off all my credit cards)?
I’ve already been approved for the loan…I have good credit so that $ 10,000 in debt doesn’t kill my credit score which is still over 700.
The home equity loan is $ 35000 at 9.99%, my credit cards are not much higher than this so I am most anxious to get rid of this bad loan…Am I thinking about this the correct way?
Answer by Judy
With that much credit card debt, you might not qualify for a low interest loan. You might still see yourself paying 8+% interest.
Which after paying all the closing costs might not be worth it.
Catch 22 isn’t it?
Give your answer to this question below!
refinance the mortgage then take the monthly savings to pay off the c/c debt in about 3 years as yes it is revolving so start with the smallest balance and add the 400 to it till gone then take the next and add what you were paying the smallest to it and work your way up from there
In being a homeowner myself I’d choose to take the money and pay off the revolving debt as that has accrued interest that can be higher percentage wise than the rate for the mortgage you have. To refinance means that you’d end up starting with a new home loan and a longer time then for the house to be paid off later on. To need that much upfront to pay for the downpayment is absurd I feel. I didn’t pay anywhere near that much in closing on my original home loan. The longer you take to pay off the revolving debt now the more interest they will end up taking out of you in the interest added on in minimal monthly payments only. I would not want to have that linger and build up especially in a time of recession now.
Pay off the revolving debt. Your home loan interest is deductible