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Mortgage colleciton question

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My wife are are looking to pay off our credit card debt. We have about 30,000 in credit card debt. We are homeowners and want to take out a personal loan or home equity loan to pay off the debt. We bought our house last year and it was appraised for 170,000. We bought it for 160,000. So we have some equity in the home.

What are the best options for us??

Please help

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Don't convert unsecured debt (your current $30k) to secured debt. Its not a good idea in general and specifically for your circumstances you do not have enough equity to attach the $30k to your home. The underwriting criteria for a normal mortgage limits your ability to do a 'cash out refinance' which is what you are looking to do when you want to mortgage your home to pay off your credit cards.

A better idea in the long run for you is to rewrite your spending plan (budget) so that you accelerate the payoff of your unsecured debt without putting that debt on your house. First formulate your spending plan with actual figures to determine where your money is going. A lot of the time more money gets spent on just stuff that could be going to pay off your debt. Sell things around the house you don't need. Get rid of anything with a payment (like a car). There are lots of things you can do to get out of debt without putting the debt on your house. If you put your budget on a speadsheet it is a little easier to see what is happening and you can do 'what if' senerios all day long if you want.

Try out the debt snowball (check out Financial Peace University for example) or formulate your own debt snowball. Some people like to pay off the lowest balances first, others like to pay off the highest interest rate cards first. Its up to you and what makes the most difference for you. If you work on it, you could be out of debt in no time! :)

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