My home is valued at $145K and I owe $2K on the mortgage. I owe a total of $5K on debts, credit cards etc. My interest rate is 7.5%

I would like to refinance for 15 yrs at a low rate for $20K

Asked by Michael

5 Answers

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Answered by Paul Carag, Financial Adviser in Renton, WA
Michael - this option is possible and available. I would encourage you to entertain the idea of attaining a 30 year mortgage if it is available and finding out what it would take to pay the mortgage off in whatever time frame you would like. The 30 year scenario, if the pricing is commiserate to a 15 year will keep your debt to income ratio in line with the credit matrix and...should life happen, you have the alternative to pay the 30 year payment. You can always accelerate your mortgage payments but this strategy simply gives you options should life happen. And life does every day. Let me know how I can be of service.

One thing to consider in your thought process is that the interest rate might be higher for the simple fact that the mortgage amount is below $50,000 and would not be considered a prime mortgage for the lender (in other words, it would not be as advantageous to them as would a mortgage over $100,000, for example, so they will charge more for it).
| 04.30.15 @ 20:24
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:26
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Answered by Les Berman
Unless you need the cash, keep paying your mortgage - $2000 shouldn't take long to pay off. And you're paying principal now - not much interest. Then continue make the minimum payment on your credit cards PLUS what you were paying on the mortgage - and you'll see the cc balance disappear quickly. If you don't need the cash, don't take out a new loan. Or if you're over 62, investigate a reverse mortgage. | 05.05.15 @ 22:00
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:26
Answered by Pamela J. Horack, , CFP®PRO+ in Lake Wylie, SC
Hi Michael! Congrats on having such low balances on all your debts. An alternative for you to consider might be to take out a low rate home equity line of credit. You could use the funds to pay off your current mortgage and any credit cards. It would then be simple to create your own accelerated payoff schedule and still have a line of credit available to you in case of emergency. | 05.06.15 @ 00:26
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:26
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Answered by Vince
What is the goal of the refinancing (other than to cash out $18,000, if I"m reading this correctly)? Are you trying to pay off the credit cards all at once, lower your monthly payments (totals), and have cash left over for some other purchases? If this is the case (all of the above), then the home equity line of credit (HELOC) option mentioned should do the trick. The key things to keep in mind are the overall cost of the loan and the payment (it should be a much lower one than the combined payments you currently make). | 05.06.15 @ 04:02
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:26
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
Hi Michael.
Rather tan tell you what what someone thinks you want to hear, lets dig deeper into what no one else is asking.

Off the top of my head:
1) Your ability to pay a $20K mortgage over 15 yrs?
2) Why do you need $20k?
3) Have you considered a HELOC ?
4) Is the $5K in debt at a higher rate than 7.5%?
5) What does 15 yrs of debt financing offer your lifestyle needs today?

A 7.5% rate is above average but without knowing your situation (credit score, ability to pay, etc), It is difficult to give you a qualifying rate. So, keep in mind GIGO- Garbage In Garbage Out.

I can tell you that any decent Investment Manager can turn $20K into around $80K in 15 yrs. A better question could be, do you prefer equity or debt financing?

Hope this helps.
Send me a message to discuss further. No obligation

It's not what you make, It's what you keep that determines your lifestyle.
| 03.22.16 @ 18:18
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$commenter.renderDisplayableName() — {comment} | 12.08.16 @ 06:26
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