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High DTI to be paid off with home equity.What can I do to getZR-FCSKVNJ

$50K income, $60K credit card debt, no other debt, retired military, no dependents. Owe $70K on $200+K house (Zillow). How can I get good rate now? 
  • May 12 2012 - Bellingham
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Answers (3)

Best Answer

Have you used your VA eligibility?  The VA will allow you to refinance.  The will allow a cash-out refinance up to 90% of your homes value at normal market rates. 

There are options that would allow the lender to cover your closing costs for you as well.

I have handled many VA loans.  Please let me know if you have any other questions.

Best wishes,

John
  • May 12 2012
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Profile picture for SoCal Engr
I am not a loan/finance pro, so verify what I say, but...

#1 - To be clear, you will not be "paying off debt" if you use the proceeds of a cash-out refi to pay off the cards. You will be "transferring" debt, getting better rates but longer terms - which hopefully results in relief in monthly cash flow.

#2 - Credit card debt is typically unsecured. Paying it off with a cash-out refi on your home secures that debt with your house.
  • May 13 2012
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John has a good point. Have your credit card debt paid off at closing with the loan proceeds. If you have your VA entitlement you should get a rate below 4% assuming your credit is decent.

I am assuming your credit card rates and current home loan rates are on the high side. You will want an analysis to determine your blended rate.

You MUST cut up your credit cards if you do refinance. It does you no good to start new credit card debt if you do this.

If I can be of any further help shoot me an e-mail or give me a call.

Best of luck,

Doug
  • May 13 2012
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