I want to refinance my mortgage so I can lower my payment and use that money to pay off other bills. I’ve seen on several mortgage lenders websites that I could also take some cash when I refinance and then I could pay back the mortgage and the cash I took over 30 years. Is that a good thing to do? I don’t want to dig a financial hole for myself-I’m trying to make things better for myself, not worse!
Terry Says: Well, a lot of that answer depends on the numbers and your job situation. First, you’ll need good credit. So I hope you’ve been at least paying the minimums, and on time, on those other bills. And you’ll need a good income to refi your mortgage, as well as equity in your home.
If you have credit card bills or medical bills, you’re probably paying a high rate of interest. In that case, it would definitely pay to refinance and pay down the debt. But then put away those credit cards and don’t use them again!!
You’ll not only get a lower rate when you refi, but if you are pulling money out for this purpose, you’ll increase your debt. So your monthly payment may not go down very much– unless you are currently paying a very high rate.
Check around on refinancing rates and costs. Or go to an online service like www.GuaranteedRate.com (or email Leslie@GuaranteedRate.com — she is my mortgage expert).
And, I have a sense that something is missing here — not quite4 sure what you aren’t telling me — but if you want personal credit counseling, taking a look at the entire picture — call Consumer Credit Counseling Services at 800-388-2227, to be connected to the nearest local office.