Your opinion about getting out of debt. Would you do it?

Question

I am thinking of refinancing my debt of over $20,000.00 to my home loan. My payment will go up $250.00 a month but I pay $500.00 min now. I will have no other payment than usual monthly bills, power, phone, ect. I also do not have a car payment. Would you do it, or just pay the debt for several more years? Also only 15 years will be the life of the loan..

I am closing every credit card but one and I am calling to lower that limit...

Answer 1

It can be a good idea but it can also be a trap. Many people use refinance or second mortgages to pay off other debt just to run that debt up again. You have to have a significant amount of willpower to avoid that.

Answer 2

If the 20k is credit card debt, trading unsecured debt for secured debt can backfire, if you lose your job, can't work for some reason, or an emergency comes up.

Having a reduced interest rate is great, but be absolutely sure you want to risk your home for it.

If you have good credit, you might qualify for a 0% for 12 month credit card promo where you can transfer a balance from a high interest card to it. If you think about doing that, be sure to thoroughly read the balance transfer terms.

But, what ever way you decide to go, don't close any cards and lower your existing credit limit until after you are approved for the loan/credit. Since closing cards and reducing your credit limit will definitely lower your scores.

Answer 3

My guess is that if you roll the loans together into your home loan, and continue to pay the amount that you are paying now (meaning paying an extra $250/month), that in the long run, that you will be paying less interest. Your banker can review w/ amorization charts.

Best of luck!

Answer 4

There are some great articles about your exact question, I found this one, seems like it would help you out a lot.
http://www.mintcreditrepair.com/tips-for-credit-card-a236.html