Forty-something wife, mom, mother-in-law and grandma (aka Honey) in sunny ArizonaWe have an opporunity to refinance our house, using our equity to pay off every single cent of debt we owe (except my studen loan). I know it's not the best market to refi right now, since rates have gone up like crazy... but we have about 130K in debt (need to update side bar), and it will take us forever to pay off using the snowball method.
I am very aware that putting all of our eggs in one basket could be scary for us. My mortgage right now is $1785, it would go up to $3100. But my MINIMUM payments alone are more than the difference.
If we do this, we have to 1000000% change our ways. No more debt, no more credit cards. If we do this, we have to pay $1500 a month extra on the mortgage (we plan to stay here for at least the next 10 years), and look to refinance to a 15 year when the market calms down (2 years?!).
All our bills are paid every month... we can afford either scenario. Both have dumb tax tied to them, but one allows us to speed up the process. And honestly, lowering the sheer number of bills we pay each month, will be REALLY nice.
I am looking into one other scenario, a seperate HE Loan. Hopefully will have #s to compare tomorrow.
May 23rd, 2022 at 02:52 am 1653274350
If it was because you had one time expenses, like medical when you didn’t have insurance, then maybe this is a good strategy.
But if it was that your living expenses are more than your income, you have an addiction like shopping, gambling, drugs, alcohol, then you are just setting yourself up to lose your house.
If you can confidently cut up your credit cards and live on the amount you make, then maybe this makes sense.
But you know the truth of your situation - if you don’t have a budget based on the past 6-12 months actual expenses you need one.
Remember too that housing values are very high right now. If the market drops, you can end up upside down in your house and if you had to sell, you ptobably couldn’t and would end up in bankruptcy.
Proceed very cautiously.
May 23rd, 2022 at 02:54 am 1653274488
May 23rd, 2022 at 02:59 am 1653274758
May 23rd, 2022 at 09:54 am 1653299668
With that being said, I think this is a bad idea. Though I’ll admit I don’t know your entire situation but the thought of putting/adding your debt to your home, in my opinion is a huge mistake. You can not pay your credit cards, this will go on your credit but not being able to pay your mortgage means eviction.
If you haven’t gotten a grasp on your spending or know why you’ve accumulated the debt, I’d stay far away from this.
Like you I had over $100k in debt, not including my house. I think 30k of that was credit cards and about 90k in student loans. I put myself on a very strict budget. It was hard, I’ll admit; however, I now have no credit card debt and got my student loans almost to half. While working the steps I gave my best friend my credit cards and told her to only give to me if the house was burning down. She held true and kept those cards for about two years.
You can do it, it’s going to take hard work but you can do it.
May 23rd, 2022 at 10:01 am 1653300081
May 23rd, 2022 at 10:31 am 1653301878
May 23rd, 2022 at 01:50 pm 1653313831
Have you looked at whether you are eligible for any of the student loan forgiveness programs? Or how about refinancing your student loan?
Do you have any emergency savings? If you don't, you could easily be in a world of hurt if something goes wrong.
May 24th, 2022 at 02:32 pm 1653402756
May 26th, 2022 at 12:55 am 1653526516
May 27th, 2022 at 02:56 pm 1653663410
Full disclosure, I don't think you should do this in 2 years either, but at least a cooling-off period might help you see if you will really be able to change your ways.