Say I have $129,000 principle left on my mortgage, and about $40,000 in credit card debt. Most of it being 0% interest, some with 1.9%-3.9% and about 5 grand of it with 28% interest rates.

Right now with mortgage, $2000 is being paid monthly even though the payment is only $1349. So that means $650 going to principal a month.
With the way it is being paid how many years would it take to pay off the balance?


I call the mortgage company and they are offering me 5.85% interest rate on a 10 yr for $170,000. I would be paying about $2500 a month even though the monthly payment they are asking would be less; But I would consolidate all the credit card debt by doing it this way. How long would this take to pay off if I'm paying $2,500 a month? and is it even worth it?

 

First off - pay off the high rate credit card before making additional payments on your mortgage.

Second - If you refinance to consolidate your credit cards onto your mortgage, you will likely be charged 0.5% (points) additional to any other points/fees.

Threeth - That is your current mortgage rate?

4th - What will it cost you (points/fees) to refi?

 

250 fee to refi at 5.85%

and they also gave me an option where I pay $3400 upfront and get $170,000 refi at 5.0%

with both options there are no other closing costs involved and yes my current rate is 5.85%.

 

How much longer do you plan on living in or owning your current residence?

In that $3400, how much of it is points and how much is fees? Reason I ask is because points are tax deductable (over the life of the refi), where fees are not.

Personally, I think you are better off not refinancing. Go back to paying the standard payment on your mortgage and put any "extra" payments toward your highest interest credit cards. Then pay off all the rest of your cards. Then tackle your mortgage.

If you get into the habit of refinancing your home to pay off credit card debt, you could easily fall into a vicious cycle or repeating (I know from experience).

 

In addition to the 2k you are paying your mortgage with, how much are you currently paying on your credit cards?

I'm asking because you are talking about the new payment being lower then 2.5k yet you would be paying that much, so I'm confused.

It would be better for you to pay off your credit card debt instead of the principal on your mortgage.

 

OP yunginTL should pay off the $5k debt @ 28% immediately, before paying any additional prinicipal on the 5.85% mortgage.
Once the high-interest $5K is paid off, is the remaining $35K CC debt still at 1.9-3.9?

OP can also look into a home equity line of credit to pay off the CC-- that would avoid a new first mortgage and closing costs. The HELOC can be used to pay off the highest-rate CC; interest on the HELOC is deductible while the CC interest is not.
Then pay off the HELOC before paying any additional prinicipal on the mortgage.

 

thanks for the all the info, the 5 grand was from a single purchase really and it hasn't been accruing for months for the interest to really add up, i just passed the grace period for it. I'm probably just going to pull out some savings to pay it off anyway.
But regarding the rest of the balance about 20 grand is no interest and the rest is 1.9-3.9.

I'm going to check and see if what exactly the $3400 is as well. And again thanks for the info.

 

so whats the advantage of a HELOC vs a HE Loan?
The house was purchased fomr $215k and is appraised at 240k recently. As i stated before 129k is left on mortgage.
I understand with a HELOC you take whatever amount u need, but the interest rate can vary. There are also a number of variables it seems to me with a HELOC, vs an HE Loan seems like a good option for debt consolidation. Then I could just refi the mortgage seperately.

I have also seen fixed apr HELOC's as well, whats the deal with them.

HELOC rates for 30 grand i have seen for around 5.25% and HE Loans are higher, a few points above 7%

 

I would take the refi and make the payment as follows:

Current mortgage payment + current credit card payment = new mortgage payment

I just find 40k in unsecured debt a bit staggering. Just want to make sure you dont put yourself in that kind of situation again, ya know?

Juggling around debt is ok with me as long as your monthly output stays the same. Im all about extending 0% offers to save intrest, but it does you no good if the $ amount owed doesnt go down.

 

I don't even make 40 grand a year, this isn't my scenario...just know someone close in this situation and wondered what would work best.

 

to add to this while we are discussin mortgages...Does anyone use a Citi Home Rebate or Amex credit card to pay their mortgage? They both offer a credit card that lets u stack rewards by paying your mortgage and i believe utilities too. Amex charges a one time fee of around $400 and the citi card pays your mortgage the reward dollars you stack up. This would only be reasonable for the person that is good with payments because if you screw up the money u could have made goes down the drain.

Seems like an interesting concept. Comments?