Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Don’t mess with your 2.75% loan. Your payments will jump up if you do that. Try looking into a home equity loan instead if you really need to pull out equity.
Don’t refinance, you’ll just end up paying more over time. Also, remember appraisals are based on past sales, not future value. So your house’s value might be less than you think.
Do you guys have issues with cash flow? How much income do you both bring in?
I thought about doing this too, but was advised to take out a home equity loan instead. That way you keep your low interest rate and still have access to funds if you need it in the future, like for repairs.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Can you try a home equity line of credit instead? It’s still risky because you’re borrowing against your house, but better than messing with that low interest rate.
Before you make any big moves, look at how much you spend on eating out, entertainment, and other non-essentials. Start cutting there.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
You’re missing the fact that mortgages are front-loaded with interest. You’d be risking your home just to pay off bad debt. Plus, refi usually comes with closing costs that aren’t mentioned.
Tighten your budget, stop spending on stuff you don’t need, and work extra hours to dig yourself out.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Check out Dave Ramsey’s 7 Baby Steps. That could help you get out of this situation.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
This might be hard to hear, but get a second job and start paying off the debt, especially the credit cards. Refi or equity loans won’t fix your spending habits, and you’ll just end up with a bigger problem down the road.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
That plan won’t work… don’t sell or refinance. You can manage this with some budgeting, and it’ll take about the same amount of time as trying to save money at your parents’ house.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
I’m in a similar spot but would never touch my home equity. Rent or buying another place is too expensive. I’ve got $200k in equity and $100k in debt. I’m working extra, but I don’t want to fall into the trap of spending more and repeating the cycle. It’s better to hang on and save as much as you can.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
I don’t see how freeing up $750 but raising your mortgage by $500 is going to help. Don’t refinance that low interest rate when your house has gained so much equity. It’s the best thing you have going for you.
Sell the truck and get a used car if you really need two vehicles.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Don’t refinance your mortgage—rates are too high, and you’ll reset the loan term. If you’re dead set on using your home equity, maybe look into a HELOC, but make sure you fully understand the terms.
Your debt isn’t that bad. Look at your budget, cut back, and maybe take a part-time job to pay off the car loans quicker. Also, biweekly car payments can help pay it down faster without much impact on your day-to-day finances.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
That’s a really bad idea!
You’ll never get a rate that low again. Maybe consider a HELOC instead if you need some cash.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Your debt is pretty low. Just make investing a priority as soon as you can. Start with a 401k, then a Roth IRA, then a brokerage account.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Do NOT! You’ll never get a 2.75% rate again in your life.
Kai said:
Bought our house in 12/2021 for $282k with a 2.75% rate. Now it’s valued around $355k-$370k. We’ve got $25k left on my truck loan, $8k on my wife’s car, and about $5k in credit card debt. No emergency funds or savings. Paying off the cars would free up about $750 a month. But a cash out refi would raise our mortgage and interest rate. I currently pay $1500 a month with the 2.75% rate. If I refi around 355k at 5%, I’d be paying $2k monthly.
Am I overlooking something? I thought about selling the house and moving in with family to save money and look for another place, but we have a kid and going back to live with family and all their chaos is not ideal. Any ideas?
Do NOT! You’ll never get a 2.75% rate again in your life.
No one can predict future interest rates, especially since the person who posted this didn’t mention their age lol.
But yeah, doubling your interest rate on a big loan like that is a terrible idea. Don’t even consider it.