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Refinancing a house to pay off bills?

If I have 20k in equity in my home, and owe that much for my car loan AND credit card, would it be wise to refinance my house to pay those off? Or should I protect the equity in my home and leave it untouched?

My mtg rate is around 6 %…my credit card rate is 13% and my car loan is 8.6%.

I also owe $20,000 in student loans, and figured if I wasn’t paying on my car and credit cards then I could pay lots more on my student loans and pay those off sooner.


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5 Responses to "Refinancing a house to pay off bills?"

  1. Ashley says:
    I don’t think its wise, why would you want to take a car loan that can be paid off in way fewer years than putting it in your houses equity??? To me you would end up paying way more in the long run for that car and you probably wont even have the car when you pay off the mtg. It seems like a quick fix to me.
  2. John says:
    Ashley is right. Way turn a 5 year debt into a 30 year. You will be paying a lot more in the long run. Do not listen to those who say to refinance and take out money to pay off your other debt since the interest is tax deductible. You only deduct the amount of your tax bracket. So if you are in the 15% tax bracket then only 15% of your interest is deductable. These mortgage people online are vultures, who just want to make money and don’t care about you. Look at the websites below and actually see how much more you will pay in interest overall.

    Think about it this way. Let’s look at the two alternatives if you were to lose you job in 3 months and can’t find another one. Right now you can stop paying your car loan, credit cards and student loans to help you over the hump. Your credit will be dinged a little. In the worst case, you might have to sell your house to avoid forclosure. If you use your equity then the only option is to stop paying your mortgage and it will be forclosed on.

  3. bdancer222 says:
    Bad idea. As others have pointed out, stretching out those payments over the long term of your mortgage means you will be paying way more interest.

    The worst thing is that folks tend to run those credit cards right back up. Then you have a bigger mortgage payment and the credit cards to pay. Don’t put your home at risk.

  4. Jeff says:
    D U M B, dumb.

    Do you really want to be paying off your car for the next 30 years?

    You say you want to free up your income so that you can pay off your student loans, but doing a refi won’t free it up, it’ll just go to the mortgage broker.

    There are only two reasons to refinance:
    1) You have an ARM, and are about to get squeezed.
    2) You can save two full points on your mortgage.

    That’s the reason you’re short on money.

  5. Steve R says:
    You can only refinance up to 80% of the worth of the house.

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