Wells Fargo Personal Loan or Refinance on Home?

[jarodmt]

This is actually me asking for my parents as they currently are trying to do about 50-60k in updates to the home. They both have credit scores that fluctuate between 790-810 and have roughly 18% utilization on the one card (gas) they have. They do have a current mortgage roughly around 700k as well. They had been talked to about refinancing and getting extra to cover it but they also were approached by Wells Fargo about possibly doing a personal loan instead as they bank there. Suggestions/comments? They are both in their late 60s and I’m just trying to help them gather information. Thanks.

[GApeachy]

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@jarodmt wrote:
 They do have a current mortgage roughly around 700k as well. 

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What is their interest rate compared to current rate?

[GApeachy]

Also, would they ever want to do a reverse mortgage in the future?

[jarodmt]

From what I understand it would be little to no difference (both around 7.5%)

[GApeachy]

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@GApeachy wrote:

Also, would they ever want to do a reverse mortgage in the future?

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I don't think you saw my second question so it's here.  And the reason I ask this is because if they thought they might it may be, not certain, but may be beneficial to have all $ tied up in the one loan.  Idk if that's true but wanted to bring that up just in case.

[Revelate]

How are they paying 7.5% on a mortgage anyway in the current post mortgage crisis credit market? Are you sure that’s their number? What’s their house approximately worth? That interest rate if correct sounds like they picked it up at least 10 years ago and maybe 20.

Get that refinanced with those scores regardless, that’s higher than my HELOC for crying out loud.

Napkin math assuming 30 year loan at 700k (ok I know it’s not that as they must have been paying something already) is around a million in interest, 4% is about half that.

Seriously refinance, TBH should have done that years ago .

LauraC: AFAIK no difference between one vs multiple loans in terms of tying money up other than one vs multiple payment: what were you thinking of specifically?

[GApeachy]

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@Revelate wrote:
 what were you thinking of specifically?

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Just wanted to know if they had additional plans for the future. (60 yrs old, some ppl that age are considering all options, including reverse mortgage.)  So I wanted to bring that up in case it would matter.  Like I said, I wasn't sure and suggested finding out, and it's good to know ahead of time just in case it could put a damper on future plans.

[Revelate]

Basically AFAIK it would all come down to DTI anyway, though with the way loan term (length) works longer is better for reducing payment so I could see your point there now that you mention it.

I would still just straight refi there is no reason to be at 7.5% currently, even non-traditional mortgages are around 6.5% now.

I don’t actually know if you could find a 7.5% mortgage in the market today.

Anyway OP a personal loan isn’t the way to go here, refinancing a 7.5% mortgage down to 4% would be a massive financial win.

[GApeachy]

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@Revelate wrote:
Basically AFAIK it would all come down to DTI anyway, though with the way loan term (length) works longer is better for reducing payment so I could see your point there now that you mention it.

I would still just straight refi there is no reason to be at 7.5% currently, even non-traditional mortgages are around 6.5% now.

I don’t actually know if you could find a 7.5% mortgage in the market today.

Anyway OP a personal loan isn’t the way to go here, refinancing a 7.5% mortgage down to 4% would be a massive financial win.

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Our mortgage is at 5%, 2008 fixed......but our TLOC,  (2011) has climbed  now to 7%  (Loc jumped twice in 11 months....I'm beyond sick, it was a dumb move on our part, kinda thinking about what OP's parents are considering but IDK.)

[Revelate]

Sort of surprised you didn’t refinance either, seemed like everyone was back in the 2011-2015 days when wasn’t hard to get under 4.

TBH you might want to at least run the numbers on a refinance yourself LC, I checked somewhat recently and 15 is at like 3.5 and 30 is around 4 and rates just took a dip.

Depending what the payment math is and given you are already 1/3 of the way through your mortgage a 15 or 20 year might make all sorts of sense for you TBH.