Re2: Good refinance plan

Out of curiousity, what steps did you take after re-financing? did you just take the new lower payment or did you use the savings to apply towards debt payment. I am finding that consolidation and re-financing usually dont fix any issues, it just pushes the burden further down the line. The best of luck to all in there quest for debt freedom. I am on target ofr being debt free in 5-7 years and hope the same for everyone else.

Well, see, that’s the problem. Our expenses and cc payments were much higher than my income. So the lower payment is just getting our expenses in line with what I bring in. We really don’t have any disposeable income. We will still try to save, though.

The steps we took were before we refinanced. I don’t go to Target twice a week — now I’m lucky if I go once a month. We eat out only once a week. We only buy food at the market — no more soda, no more chips, no more processed foods, those add up. We realized that Trader Joe’s is much cheaper than our regular market. I don’t wait to fill up my gas tank when I’m almost at empty and drive into any ol’ station. I make sure I get to the station withe a good price on gas.

Our issue is our spending and that’s what we’ve been working on these past two years. We have two cars that are paid off and we won’t buy another one until we have cash in hand. We just couldn’t get our expenses low enough and the refinance was our last resort.

I think most people are finding the same thing out the hard way and of course the way the credit industrys string people along doesnt help.

I found out after loosing my income how bad a shape I was in, I have since recovered and luckily did not loose anything.. I did some searching and came across a guy by the name of john cummuta. I have since learned why it is that myself and many others cannot eliminate their debts for good.

Since I have started following his methods I am making a huge dent in my debts. Even if you have start small , following his methods will create a huge debt pay off machine. Look on the net for him, his program is called debt to wealth.

Living paycheck to paycheck will hopefully be soon a thing of the past. Somewhat the same situation here. I am aching to think about refinancing with the CC’s included, though the problem I have is similar to yours, with more money going out than coming in.

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Re: Good refinance plan

Here is my 2 cents worth…

Re-financing is dangerous “if” the following happens. If for some reason your income changes and you are stuck with the lower paymnet for the long term then you will probably spend just as much if not more in interest charges over the term.

On the other hand, given the numbers you have shown and the fact that you have an extra $1241.00 a month , then it can make great sense to do so “If” you apply that extra amount to your mortgage payment which will accelerate your mortgage payment and will save you a TON of money . You will then have made it worth while to do so. Instead of paying 92% interest which most loans do in the beginning you will actually be wiping out principal and saving a ton on the interest charges you would normally have paid just paying the reduced amount of $2466.00. This is assuming your goal is to be debt free.

Thank you for your input.

Debt free? Yes, that would indeed be my goal. As it stands now, after looking more carefully into my debt (AFTER my post here) I realize that I actually pay MORE a month between all my bills, than my wife and I actually bring in. AND, this does not even include food and groceries. I realize it’s time to also cut out some “monthly” items that I can probably do without. While the refinance will most definitely help, I realize that my habits need to change, dramatically, for the plan to play out as intended.

I thank you, again, for your response and input.

We are in the same situation and we did recently refinance. It really hurt me to do it, but the rates are low right now and I think they are going to be cut again today. We went from two incomes to one (husband just recently got his family therapy license) and we did not have the income to cover our expenses. We’ve been cutting back for two years, but we finally had to face the facts. In those two years, though, we’ve gained alot of practice in *not* spending or using credit cards. Although we didn’t want to refinance, we realize we could be in a worse situation. It has been a very difficult road to go from consumer to a deliberate spender, but it can be done. Good luck!

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Good refinance plan?

refinance planI’m currently in the position of possibly refinancing my home, and tacking in some credit card debt as well.

While the offer being give sounds all good, I’m not by any means “money-literate”.

So, maybe I’m missing something here. Here’s my situation at the moment.

I have a first mortgage, traditional 30-year fixed, at 6%. I have a second mortgage, interest-only, adjustable rate, currently at 9.5%. Been at 9.5% for the last 3 months.

I also have a credit card debt of $37,965 spread out amongst 4 credit cards. I am exactly 3 years into my current mortgage.

1st mortgage (6%)
$320,234.00 balance

2nd mortgage (9.5%)
$320/month interest only
$39,623.00 balance

Amex CC (9.9%)
$217/current minimum payment
$10,930.00 balance

Chase CC (9.9%)
$118/current minimum payment
$5,690.00 balance

Chase CC (3.99%)
$191/current minimum payment
$9,373.00 balance

Citibank CC (3.99%)
$181/current minimum payment
$11,972.00 balance

With these above, I am currently paying “at least” $3,027 a month, just to keep all my payments in check. Realistically, I only pay the minimums on the credit cards, but I actually pay $1,000 towards the second mortgage instead of just $320, so that I have principal covered as well. So, in reality, actual funds I am paying monthly is $3,707/month.

On a refinance, I was offered 5.8%, for my 1st, 2nd, and CC debt. Fees to be included into the payments, of course. This is the offer I received.

1st mortgage, 2nd mortgage, and all credit card debt, consolidated into the refinance.

$2,466/month, would cover all the above. 30-year fixed. 5.8%. Fees already included into the monthly.

So, I’m currently paying $3,707/month, which covers my 1st and 2nd, and the minimum only on the credit cards. If I do the refinance, it would be $2,466/month, and would also cover the 1st and 2nd, as well as all the credit cards, and in return would leave me with $1,241/month additional cash funds, for reinvesting or otherwise.

The numbers all sound good. Already approved for the above. But, I am mostly questioning if its a good idea to drop the two credit cards in there that are currently at 3.99% each. Would it be better if I just went ahead and consolidated all EXCEPT the one Chase and one Citibank card? Then, with the monthly savings, I could pay off those lower-interest cards much more quicker myself, as opposed to throwing them into the 30-year plan and stretching them out. At the same time, I can keep my new monthly mortgage at a lower rate.

Any suggestions and opinions are greatly appreciated.

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