To Refi or Not to Refi?

Housing Topics
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Question for the Financially Savvy

Current Debt Situation:

  • Truck: $25,000 remaining (payment: $500/month)
  • A/C Units: $24,000 remaining (payment: $300/month)
  • House: $163,000 remaining on the loan at a 2.25% interest rate (payment: $1,200/month)

My house is currently appraised at around $250,000. I’ve received an offer to refinance at a 6.2% interest rate, leveraging the equity in my home to pay off the truck and A/C unit debts.

Current Total Monthly Debt Payments: $2,000 across all three loans.

Post-Refinance Monthly Payment: $1,800, after consolidating all debts into the new mortgage. Additionally, I’ll be eligible for the VA IRRRL program, which could potentially lower my interest rate after six months of on-time payments.

My question is, in the long term, is this move financially wise, or am I being short-sighted? I’d appreciate any advice. Thank you!

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You really shouldn’t do this since you’ll only end up having to pay for air conditioners and cars again!

After paying off your obligations, avoid taking on new loans. Don’t interfere with the house; it’s on a terrific rate.

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If refinancing fits your loan terms, market conditions, and financial goals, it may be a wise decision. Make the best decision for yourself by carefully weighing the advantages and disadvantages and speaking with a financial counselor or mortgage specialist.