I wanted some guidance/opinions. I currently have 2 mortgages, I have one with a conventional loan and have about 120k equity build up, I owe about $160k my rate is great is 3.75%, my monthly payment for the mortgage is about $800 and $600 for escrow (insurance, taxes), I just started renting it out a couple of months ago, on a year lease and I take in about $400 per month "profit" My second mortgage is a VA loan $289k, 5.75%, just started paying this off so not much I can do about it.
I have about $40k of debt in credit cards that I would like to pay off, my credit score is about 720.
I'm debating whether to refinance my rental property to pay off my credit card debt. My debt was accumulated mainly from spending about $10K to fix my rental and then just regular expenses bc I was a TR for about 2 years not finding a job just getting orders every now and then and having an ART job get cancelled twice on me, but now I'm AGR, and I'm trying to get my financials straight again.
I know the rates right now are above 5, from what I'm reading 5.25-5.5% which will be more than my old rate but I could pay off all my credit card debt ($40k) at once and start building my savings and still have some equity left (about $80k).
What are your thoughts? Any advise is appreciated. Thanks!
Refinance to pay off debt.
byu/Mr_International_407 inMilitaryFinance
Posted by Mr_International_407
2 Comments
You left out a pretty key piece of information. What’s the interest rate on the credit card debt? You’re comparing 3.75% to 5.5%, while credit cards typically charge 20-30%.
Others might have more insight, but you getting a cash out refi now at 5.5% even seems unlikely. If that’s your only option, that’s your only option other than a HELOC or personal loan.
You should’ve sold the rental, you can’t afford it