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Need advice - Mort Refinance, HELOC & SL Refinance

MBOhio2
Established Contributor

Need advice - Mort Refinance, HELOC & SL Refinance

My husband and I have a couple of financial/home goals that we would like to tackle in the same timeframe, and I am trying to understand how to go about it. So I am looking for advice on the order of things, and just generally the best approach. Below are the 3 goals and the different factors involved in each. Is there one of these that I should do first, like the mortgage? Or given my explanations below, should I do one of the other goals first?

 

We have a high income and stable employment. The main reason for our scores not being higher is that we took out a HELOC at the time of home purchase in 2017 to avoid a jumbo loan (we used a conventional mortgage + HELOC to cover the original purchase price) - as a result, the current HELOC is still at a fairly high balance, is being counted as revolving credit, and is making it look like our revolving utilizaton is high, despite having no credit card debt. So one thing to consider is that getting a second/larger HELOC, is likely to increase our credit score by brining down our utilizaton (unless we spend that money, of course).

 

GOAL 1: Refinance mortgage - Our mortgage is from 2017, so pretty recent, but rates are so much better now that we could save quite a bit on interest by refinancing. It looks like we could probably lower by a full 1%, so our payment would be lower and we would save a lot of interest over the years. We plan to stay in our home for the next 15-20 years until our young children are grown. What is the easiest way to find the best rate with our credit profile (scores between 680-700)? I've heard of using the features on Credit Karma or even Zillow to pull from lots of lenders - any best options?

 

GOAL 2: My husband has multiple private student loan accounts with a couple of different lenders. Some of the rates are fairly high. We would like to refinance/consolidate all of these together, to get a better rate and make it easier with one payment, so that we can really start tacking this debt and knock it out in the next 5 years.

 

GOAL 3: We would like to take out a HELOC for a home renovation project. We would like to get financing taken care of soon, but don't need to actually start the project immediately. As stated above, I think it's likely that this HELOC will actually increase our credit score (currently 680-700) because it will substantially reduce our utilization %.

 

I know this is long, but I truly appreciate any advice/help!

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
3 REPLIES 3
kc0039
Established Contributor

Re: Need advice - Mort Refinance, HELOC & SL Refinance

From what I've read, here are your options

 

1. Refinance the 1st and HELOC together and it'll be a rate and term refinance, granted you have enough equity. Then open a new HELOC

2. Refinance the 1st, HELOC, and student loans into the mortgage and it'll be a rate and term refinance, granted  you have enough equity. Then open a new HELOC

3. Refinance just the 1st mortgage and increase the HELOC to pay for the student loans and have enough to pay for a renovation

4. Refinance just the 1st mortgage, consolidate your student loans, then increase the limit on your HELOC to do renovations. 

Licensed in IL
Message 2 of 4
MBOhio2
Established Contributor

Re: Need advice - Mort Refinance, HELOC & SL Refinance

Thanks for this feedback. It sounds like universally, the 1st mortgage should be refinanced first, is that what you are saying?

 

I think I prefer #4, and this is the approach that I originally had in mind. We do not want to roll the student loans into the mortgage. While we realize that a mortgage is going to have a better rate than a student loan consolidation, we want to keep them seperate so that we can pay them off in the next few years and then be done with that payment/debt (rather than having our mortgage payment always tied to the orignal mortgage + student loans). Also, we would like to get current debt "fixed" before we take on anything more.

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
July 2017 Current Scores: Approx 710 (waiting for official updates)
Message 3 of 4
kc0039
Established Contributor

Re: Need advice - Mort Refinance, HELOC & SL Refinance

If refinancing the 1st mortgage saves you on your monthly mortgage payment and that's your goal, then go for it. If it doesn't make sense to refinance the 1st mortgage due to costs, etc, then consolidate your student loans and increase the HELOC limit

Licensed in IL
Message 4 of 4
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