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Consolidate with equity loan or %125 loan


JMan5000
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Hi all, been reading the forums here for many months but this is my first post. I bought my first home in Jan of 2003 for $161,000 with my fiancee. It is an 80/20 loan. The 80 loan is fixed at 6.5% for the first 3 years, and then it arms at prime plus 3 or so(30 yr loan). The 20 is a fixed at 9.9% and is a 15 year loan. Both have a 3 yr prepay penalty of 5%(sucks!) on anything paid over 20% of the principal. The main thing I am trying to do is consolidate 2 high rate cc's (one is $2000 at 25% and the other $5000 also at 25%). I would guess I have about $10000 equity?(5% on the house per year and about 2000 paid on the pricipal so far). My questions is what is the best way to try this. Can you get 125% loans if I just refi the 20 loan. Or maybe just refi the 20 loan and use any equity left to pay off the CC's. I also want to do this because my insurance and property taxes arent in the loans. Sorry for the long post but thought it was necessary to really see where I am sitting on this. TIA to anyone that can help me :D

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I wouldn't look into a 125 solely to payoff 7000 in credit cards. By the time you consider the fees involved and the increase in rate it won't be beneficial. You may want to look into some of the teaser cards that are out there. Look for 0% on balance transfers, and make sure you make your payments on time. This is usually not something that I'd recommend. But if you can handle the juggling act, I'd say it's your best bet.

You can setup an escrow account with your current lender on the first. Just give them a call.

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Thanks for the reply Allie. We do actually have another high rate CC at about $7000, and there are some home improvements we wanna do. The total would be about $20K at the most. What kind of fee's are there usually associated with a 125% loan (best case scenario) and how much higher would the rate be compared to a regular home loan? Our monthly payments on CC's is about $390 alone. And thats paying the minimum which is getting us nowhere.

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You can get a 125% loan on your home, but 1) you would need about 1500 a month in disposable income (the amount over and above your bills), and the rate would be very high (in the 13-14% range) and it would cost about the as a regular loan.

Charles

BTW I dont advise this type situation...

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