Comments on: Would You Consider a Home Refinance to Pay Off Credit Cards?

By: champo

champo — Mon, 12 Oct 2009 06:38:41 +0000

being in the mortgage profession in Vegas- you see plenty of debt consolidation refi’s since everyone in town is leveraged. Most think a dc refi is a cureall- but like many have said fail to realize you are amortizing those cc payments over 30 yrs as opposed to 2- plus closing cc accounts is not great for your credit-especially if you are closing all of them.
This article was particularly honest especially for a mortgage site in explaining the drawbacks of a refi:
http://www.bankapedia.com/mortgage-encyclopedia/faqs/661-when-are-the-drawbacks-to-refinancing

By: Bobin SC

Bobin SC — Tue, 16 Sep 2008 19:39:46 +0000

Having been this route before, I agree that if you can’t change your spending habits, this is financial suicide. I’ve saved $100K in my retirement accounts but have incurred about $25K in unsecured debt (now down to about $18K). One way of doing this has been cutting off my retirement plan (and the tax deferred/deduction benefits), which I hate. I’m looking at a year away from being debt free with an emergency fund vs. shuffling the deck and resuming my retirement savings. It’s definatly robbing Peter to pay Paul a fortune and risking shooting yourself in the head in the process. For most, a refinance plan better include a lifestyle without credit and ATM cards.

By: Raff

Raff — Mon, 15 Sep 2008 16:16:44 +0000

I think some of you are getting hung up on the differences between secured and unsecured debt -the difference doesnt matter unless you are in bankruptcy. Many states protect your home from creditors and as far as foreclosure – most banks are waiting over a year to foreclose.

If you were in a sub-prime mortgage and can qualify for a better mortgage it makes sense because you’ll shave more than a percentage point with the refi and pay off 10-20k of credit card debt without increasing the mortgage payment substantially. Your tax advantage alone will outweigh the 3k you pay in refi costs. You also have to be sure that the charges wont reappear and that prepayment penalties dont apply.

Just be sure to multiply your new payment times the number of payments to get a grip on how much more you are paying in the long run for your refi.

By: credit debt consolidation

credit debt consolidation — Thu, 31 Jul 2008 03:56:08 +0000

For people with credit card debt across multiple cards, this option is one that you should be exploring to reduce your payment burden. Credit card debt consolidation is also the fastest way to pay down your principal.

By: Hanks Weekly Hangouts #40 (July 27, 2008) | My Investing Blog

Hanks Weekly Hangouts #40 (July 27, 2008) | My Investing Blog — Sun, 27 Jul 2008 08:05:24 +0000

[...] 5. PrimeTimeMoney presents Would You Consider a Home Refinance to Pay Off Credit Cards? [...]

By: PT

PT — Fri, 25 Jul 2008 01:10:35 +0000

@Kacie – I agree. A nice 0% Intro Interest Rate Credit Card would do the trick.

@Cat – Thanks for your comment, Cat. This was a guest post. Not my opinion. I think my question at the end clearly shows that I’m leading the reader to question this idea. Which you rightfully did. While I don’t think that Debbie’s (guest poster) post was “misleading” as you say, I do think that it doesn’t cover the subject from all angles. HELOC’s, like any financial product, can be used poorly or wisely. I like your idea of a follow-up post. I’m working on it now.

By: Jeremy

Jeremy — Thu, 24 Jul 2008 23:32:26 +0000

I found it interesting that in the latest issue of Money magazine, they profile a family and tell them to do exactly that! I thought it was outrageous, especially when it said they were funding a 529 plan and already had over $100k in retirement plans. Clearly, they have the ability to save, so if they focused a little more on the debt they could obviously pay it off without needing to secure their unsecured debt with their house, especially in this unpredictable real estate market.

By: Cat

Cat — Thu, 24 Jul 2008 23:20:04 +0000

NEVER EVER replace unsecured debt with secured debt. To even give this subject a thought is irresponsible. If you are responsible enough to pay down your debt, you shouldn’t need to refinance your home. Also, if you are having trouble making your payments, your credit score is suffering and you would likely not get a great rate on the refinance. Please post a follow-up article explaining secured debt and unsecured debt. You have misled readers today.

By: Eden

Eden — Thu, 24 Jul 2008 17:53:04 +0000

I would recommend NOT refinancing to pay off credit cards- ever.

I did this myself and still regret it. First of all, if you go into this thinking you are solving your problems, you are fooling yourself. It won’t be long before the credit card debt has piled up again (exactly what I did).

Also, it really isn’t wise to turn unsecured debt into secured debt. If your situation gets worse, you could let credit card payments slide and deal with them later, but if you have now leveraged your house to that debt you could be out of a place to live.

By: ChristianPF

ChristianPF — Thu, 24 Jul 2008 16:29:29 +0000

Yea, I actually have a friend looking at doing this right now… I tried to warn him that even though he could save money by getting a lower interest rate, he will be in big trouble if he continues spending like he has…