Consolidating debt into a mortgage
Among those considerations: Does refinancing make sense, and are you aware of the danger of rolling unsecured credit card debt into your secured home loan?“Every person has different things they’re looking for and what they want to get from it,” says Rebecca Costanzo, a senior vice president at Sun Trust Mortgage.As of May 23, 2018, the average credit card interest rate on new card offers is 16.73 percent, according to Credit Cards.com’s Weekly Rate Report, while the average 30-year fixed rate refinance is 4.52 percent, according to Paying off your card debt by rolling it into a home refinance could ultimately cost you more, experts warn.Say you have 13 years left on your mortgage, and refinance to a 30-year loan to cover your mortgage and credit card debt, “the total amount of interest could be significantly more,” says Chris Dlugozima, an education specialist with Green Path Financial Wellness.Here’s the danger: If you owe 0,000 on your home and refinance for 0,000 with the extra money going to pay credit card debt, your monthly payments would be higher. I suspect it’s because I live in a trendy Tampa neighborhood called Seminole Heights. Great restaurants and neighbors make this a great place to call home.If at any point you got in a major financial crunch and couldn’t pay your mortgage, you could potentially lose your home.(Story continues below)Earlier this year I received a mailer offering ,000 more than what I owe on my Tampa, Florida, home (in the above picture) to refinance my mortgage. Yes, Seminole Heights made the national news for several weeks during the hunt for a serial killer last fall, but that was an aberration. But would it be wise to refinance my cute two-bedroom home for 15-30 years to get a financial windfall that I could spend however I wanted?Then a solicitation from a company I’ve never heard of offered me 0,000 more than my home is worth. In researching this story, I came to the conclusion that a cash-out refi wouldn’t be smart for me.
This example focuses only on monthly payment savings.
Paying off card debt now and losing my house later? Refinancing your home carries added costs, such as closing costs, an appraisal and title search fees, Costanzo says.
That could add several thousand dollars to your transaction.
It doesn’t address costs associated with the closing of the refinancing or any other fees.3.
The above example assumes the ,000 in credit card debt is paid off in 30 years.
Apply for a balance transfer credit cards: Balance transfer cards give you breathing room of a year or more to pay off your card debt with no interest, Nitzsche says.