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

By: Hopeforme

Hopeforme — Thu, 01 Jan 1970 00:00:00 +0000

@Eden Thanks for the info, unfortunately, I wish I had asked this question 3yrs ago. I have the same situation, banks are after me again to refinance. My answer should have been no then and found some other way to pay ccards off. My answer is definately going to be no this time. Your right keep pushing the mortgage payment up until I can’t afford it anymore is not the right thing to do. @ Cat Has made very good points too. Thank you…

By: Hopeforme

Hopeforme — Thu, 01 Jan 1970 00:00:00 +0000

By: champo

champo — Thu, 01 Jan 1970 00:00:00 +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.

By: Bobin SC

Bobin SC — Thu, 01 Jan 1970 00:00:00 +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 — Thu, 01 Jan 1970 00:00:00 +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: PT

PT — Thu, 01 Jan 1970 00:00:00 +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, 01 Jan 1970 00:00:00 +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, 01 Jan 1970 00:00:00 +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, 01 Jan 1970 00:00:00 +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, 01 Jan 1970 00:00:00 +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…