Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Mortgage
Profile Image

Question By
monrev

0 Contributions
0 People Helped
Refinancing Mortgage While Folding in Credit Card Debt?
Im looking into buying a home within the next 6 months. The good news is that I was pre-approved for more than I thought. But the bad news is that I actually dont believe we can afford a mortgage that high due to all the credit card debt we currently have. Ive been entertaining the idea of re0financing our current home, but I want to know: can I fold in my credit card debt into the house loan to clear those high interest credit cards? We have just over $11,000 in credit card debt that feel like are never really making a dent in payments. Any advice is appreciated! TIA.

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Results 1-2 of 2Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
1884 Contributions
3670 People Helped

as long as you have the equity

you can certainly ask for more than the balance on the mortgage if you have the equity in property.  as long as the refi is at a better rate than your current mortgage it would be best to pay off the credit card debt before moving on to a new purchase.  Once those cards are paid off, keep them paid off. Credit card debt that you can not pay off within a couple of months means that you are living beyond your means and should be curttailed.  You want to keep the balances as close to zero as possible before moving on to the purchase of the new house.

Good luckl

Top Contributor

Reply by
EddyTX

1884 Contributions
3670 People Helped

also wanted to mention, When you do the refi, make sure you check out the early pay off on that loan,  there could be big fees when you sell if that new loan is still very young,  make sure to ask the loan manager about what fees would be do if you were to sell that house in the near future.

Top Contributor
229 Contributions
79 People Helped

Eddy gave some good advice.  A couple of things about a cash out refi I have learned as I have been going through one right now.

1) interest rates are a touch higher on a cash out in relation to just a refi.

2) You can only go to 80% LTV.  If you owe 70k on a house that apraises at 100K, you can only get 80k loan that mean 10k cash and that will be less based on #3 below

3) there are some costs. Any where from 1000-4000 depending on points and other factors of what the mortgage broker/lender can do.  Figure a minimum of 1500 + 500 out of pocket for appraisal.  Also depending on your escrow you could have another couple thousand taken out of your cast to go into your escrow.  But you also should get a check from your old lender for money that was in their escrow account.

4) The new loan will really make your underwriter on the new house nervous, and you can be prepared to write several letters to justify it. especially if you are only 6 months out.......For this reason alone I would really stop and consider before doing the cash out refi.

5) I will state that what Eddy said about interest can be true, and false.  If the interest is even slightly over your old loan doing a cash-out can be smart if you are saving a lot of interest on the cards, so if they are at 20% interest you can afford to go .25% higher on your house loan (just geussing at numbers you need to crunch them yourself for factual numbers in your situation).  Also the interest you are now paying on the 11k will be a tax write off, where it is not to the CC companies.

Results 1-2 of 2Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.