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Refinance House or Student Loan?

We have $25,000 which we were originally going to use as a down payment on a new house. We currently pay the mortgage on a house that is a duplex we live in 1/2 of. We recently didn’t get the house we put an offer in for but would like to purchase a new single to live in in about a year. One of my student loans is for approximately $33,000 at 6.5% interest, our current house is $140,000 at 6.5% interest but I’ve heard we’d have to pay for closing costs, assessment, etc. to refinance. We also will have to build up enough money for down payment for the new house in a year. Should we refinance current house, pay off student loan or keep money in bank collect interest for next years house?

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2 Responses to "Refinance House or Student Loan?"

  1. Tigg says:
    Pay off the student loan.
  2. RetiredDebtFree says:
    If you can refinance your current home for 4..5% and live in it another two years before turning it to rental then that will be worthwhile even with the $2500 in costs to refinance. Make sure you put $4000 of that money into a money market account for emergencies. (vacations are not emergencies, a/c units and car repairs are). If you reduce your mortgage you can use the savings to pay more on your student loans, and you will also be able to use the $17000 to pay down half of the student loans immediately. That will make a huge dent in your debt.

    Then start paying off your student loans as fast as you can and stay out of debt beyond that. It will feel great to get that paid for, and start working on paying off the mortgage, or saving for the 20% down on the next home. Good Luck.

    If you have not read Dave Ramsey’s book, Total Money Makeover, that is worth a $15 investment.

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