I must disagree with many of the posted replies in this thread.
One thread stated that OP now faces 30 year payoff vs. 2-3 years? People carrying balances on CC's, especially if the rates went up significantly are facing substantially longer pay offs than 2-3 years and at much higher rates, exacerbating the cash flow problem.
If OP rolls debt into a good APR, say 5 to 5.5%, there is nothing that forces OP to pay off the CC debt portion over 30 years. OP has the ability to pay more in principal and only incur the lower APR.
OP also has the stability of knowing the rates and month to month obligations will not vary, which is not the case with CC's.
OP may over time recoup some of the cost of the refi if his home value appreciates in the long term. Therefore the combined paydown under lower APR with appreciation of value help OP position.
YES, yes, yes, there is a risk associated with running up new CC debt. Thus, OP you have been aptly warned against such. But in the event that you do not incur new CC debt, live within your means, pay your APR savings toward CC debt, and continue to pay what you would have paid on the CC debt toward the mortgage, then you are gaining ground faster than paying under the CC's.
Many financial planner will advice to consolidate loans at lower rates in order to facilitate a manageable cash flow. Especially when the plan includes accelerated pay down at the lower APR. Financial planners advise against this when the individual is not likely to avoid new debt or does not follow a financial budget/plan.
Therefore I applaud anyone who restructures debt at lower fixed rates, sticks to aggressive payoff of that debt while avoiding new debt.
The risks are known to OP. Then again, those same risks are also somewhat the same even without the refi in the instance that OP were to obtain additional credit, CLI's, etc. and run up new debt. Those debts still affect the mortgage by making it harder to pay the mortgage payment and by eating up discretionary income in the form of higher APR rates, meaning less savings put in reserve.
I don't agree with straight line veto on rolling secured to secured in all cases. If the home is being used as an ATM to support the overextension lifestyle, then bad idea. But if used as a tool to restructure and overcome debt, then it can be a great tool.
