Asked by Debbie  |  Submitted January 24, 2017

Is it better to get a home equity loan, or refinance my current mortgage? My mortgage is $48,000 with 5.85% interest.

I have about $35,000 in debt I would like to pay off, or roll into one loan.

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  Answers  |  2

March 24, 2017

We would need to look at the whole picture, but generally, since your mortgage rate is so high, it would make sense to refinance your mortgage anyway and you might as well consolidate that $35,000 along with it. Please watch out that adding that $35,000 does not push you into paying Mortgage Insurance on the new home loan, because that will likely take away any benefit from lowering the interest rate. You can also choose how long the new mortgage is, so if you have 20 years left now you can get a new 20-year mortgage, so that you are not adding more years onto the home loan. Alternatively, it may make sense to go with a new 30-year mortgage to really lower that monthly payment. Get it done soon, though. Rates may be into the 5's again this summer!

- OneRay

$commenter.renderDisplayableName() | 09.20.20 @ 22:58


April 11, 2017

A new ~ 85K loan is likely your best bet assuming the costs for the refinance are low. A lot depends on the costs, how long you plan on keeping the home, what you want or need the monthly payment to be for your budget, and if you can qualify for the new loan. I hope this helps

$commenter.renderDisplayableName() | 09.20.20 @ 22:58