@CreditJim wrote:Apologies for the long post in advance. For the past year I've been undertaking a major home remodel and I just want to crunch some of the numbers, and hopefully get some advice on the best way to tackle the debt. The remodel has run over budget financially and time-wise.
House purchased for $394k, 30 years at 4% mortgage. Balance of the mortgage loan is $297k.
Have to date spent approx. $175k on the remodel. Most financed by cash we saved, the remainder with a loan and credit cards, as follows:
1. Personal loan - 50k at 6.990%. Balance is $39k and monthly payment is $1k
2. Credit card - 28k balance at 7.65% (indefinite)
3. Credit card - 19k at 4.99% (expires 11/2019)
4. Credit card - $7252 at 0% (expires 8/2019)
Total debt is approx. $93k (not all remodel)
I have sold another property I own and have $75k cash so I could pay a large chunk of this off. The original plan I had, a year ago, was to refinance the mortgage and wrap the debt into the mortgage. The house will appraise for approximately $650k so there's enough equity in it.
Now, a year on, with mortgage rates on the rise I'm reluctant to lose the 4% mortgage I have on my house. So I've been thinking about the options. One is to pay most of the debts off with the cash I have, and be cash poor. Another is perhaps a home equity line of credit. Also perhaps it's still worth considering refinancing the mortgage.
As you can imagine, my monthly payments are through the roof. Whilst I am OK with the payments now, it would obviously be nice to lower them. If I refinanced the mortgage or got a home equity line of credit, the problem I'll have is that my score has tanked due to the hit from all the utilization.
Any advice, ideas, tips welcomed.
The worst thing you can do is borrow against the "equity" in your home.
My advice: don't refinance the mortgage or get a home equity line of credit.
Just take your 75k, pay off the personal loan, and pay down the credit cards.
Being 'cash poor' is much better than being a debt slave.
And having 75k while owing 75k is the same thing as having nothing; you are just as "cash poor" either way.
