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What should I do?

Hi,
I'm in a bit of a pickle. My house is worth $155k bought new 2 years ago. I owe $70,600 at 4.625% 30 year fixed (made extra payments) and have a second mortgage HELOC with $13K on it at 3.5% variable w/ $30k limit.
I just got a statement last month my escrow has a $2,418 shortage and I have $53,500 in home business debt that I'm trying to lower the payments on.
I could: a) Refi for $94k at 4% fixed 30 year, keep my HELOC and put $24K on it including the escrow shortage, and have $20k in business debt. I would pay down the business debt asap and then focus on the HELOC. Monthly payments would be about $1300 a month. b) Refi for $140k at 4% fixed 30 year, lose my Heloc, and add PMI for about $116 per month. Monthly payments would be about $1230 a month. I'm trying to lower my monthly cost, but while I'm looking for a job (my wife still has hers) we've been using the Heloc as a savings/checking account. If I do nothing… my Monthly payment will be $1200 plus $160 on HELOC plus $700-800 with business debt. Anyone with any better ideas?


  • September 19 2012 - Blacklick
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Answers (3)

You're welcome. Good luck!
  • September 20 2012
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thanks for the reply... I noticed I messed up option b) monthly amount... it would be $1130. I have talked to my mortgage company about refi, but not a cash out option. I'll give him a call. Thanks for the reply again!
  • September 19 2012
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Depending on what state you are in will depend on what the maximum cash out limits are for you. The thing you have to first take into account if doing a refinance is that if you are under one household income currently (your wife's) then she would have to qualify for the new loan, and be able to carry the debt load on your credit, all on her income alone. There is a certain maximum debt to income ratio we have to stay within as lenders. If you can qualify on her income then I'd suggest option "A".

For starters, speak to a reputable lender to find out your maximum options for cash out, if you haven't already.
  • September 19 2012
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