Hi Money Minder,
Our original loan was taken at 5.6% for $135k, and now our home is valued at around $200k. We’re thinking of refinancing just enough to clear off this looming debt. The new loan would come with a slightly higher rate of 6.6%, but we’re hoping it will be worth it in the long run.
Do you think this is a good move to lower our monthly payments and consolidate our debts into one with a better interest rate?
Cheers,
Hopeful Homeowner
Response from THE MONEY MINDER:
Hello There,
I understand the challenges you are facing with your mortgage and credit card debt. It sounds like a stressful situation, but there is a practical approach to consider. Refinancing your home to clear the credit card debt and consolidate to a lower interest rate may seem like a good idea on the surface. However, it’s essential to carefully evaluate the terms of the new loan, including the 6.6% interest rate, to ensure that it truly offers a better solution for you in the long run.
Before moving forward with refinancing, make sure to consider all of your options. It’s crucial to calculate the total cost of refinancing, including any closing costs and fees, to determine if it outweighs the benefits of consolidating your debt. Additionally, take into account the total amount you’ll be paying over the life of the new loan compared to your current situation with the credit card debt.
It’s also important to address the root cause of accumulating credit card debt. Creating a realistic budget and implementing a strategic plan to pay off the debt over time can provide a more sustainable solution. Consider seeking advice from a financial advisor or credit counselor to help you navigate through this challenging situation and develop a plan that works best for your financial well-being.
Remember, taking control of your finances and working towards a debt-free future requires discipline and commitment. It may take time, but with determination and a strategic approach, you can overcome this hurdle and build a solid financial foundation for yourself and your family.
Best of luck as you navigate through this challenging situation.
Farewell from THE MONEY MINDER.