I need some advice on refinancing. We curently have a 30yr fixed loan for $94k at 5.75%. We also have a HEL with a balance of $8000 & i believe an interest rate of 6%. The house itself is worth around $160k and the housing market is stable if not still going up for the time being. We have roughly $8k in cc bills. I was talking to a lender who told me today that I can get a rate of 5.37% today and refinance for $114K. That would pay off the HEL all the cc and still have about $2k to work with. The new house payment would be the same, give or take a few $, as we are paying now with the HL and HEL. We would then not have $225 in cc payments every month that money could be applied to our auto loan, house payment or put in savings. I was also thinking about waiting until it fell to 5.25%

I'm also looking to build up a cushion of money because this fall we are going to need around $1000 to establish guardanship for our oldest DD before she turns 18. We are also in the process of admitting her to a treatment facility for behavioral issues. We will have to relinguish custody to the state for medical reasons after we have exhausted her medical coverage for the year (about 90 days after she is admitted). She will then be covered under medicaid. But we will have to then pay child support to the state and i have no idea how much that will be. But does anyone know do they take into account the cost of your house payment when they figure out child support? Also we will have travel expenses because we need to visit at least twice a month and it's over 200 miles round trip.

Please give me your honest thoughts and suggestions. DH is no help and wants all of this to go away.

I wouldn't do it. First of all, it's not enough of a rate drop to justify appraisal and other costs. Also, keep in mind you'd be starting the clock over again. How long have you paid into it? Is that a fixed rate, and is that the FINAL APR that can be locked in?

Also, building up a cushion from a loan is not something I'd feel comfortable with.

IMO, it looks like the short term looks good, but overall doesn't make financial sense.

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As a loan officer in a former life, please don't refinance unless you are getting at LEAST a point lower than your current APR!

As Desertmom also pointed out...It does look good in the short term but you have an appraisal fee, and closing costs to consider (they average about $3000) , plus does your state have an early termination penalty on your mortgage and HEL? Some states do, my state does not under 150k, but it is something else you need to consider, and find out (your current contracts should have the disclosure on them, if not contact the lein holders themselves).

Child support...you can google your state and child support calculations and see how they are figured, each state is different, but it is usually the supporting parents income and other dependants and sources of more income, your debt and mortgage payments have very little to do with it.
Good luck!

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I would also add that IF you were to do it then get rid of your credit cards. There is no point in "consolidating" your debt into your house if you are only going to run up more cc debt.

Also you need to look at how much longer you are extending the life of your loan AND interest payments.

For ex: we have a 30 year mortgage that we will have paid off in about 22 years (total) - so in about 16-17 years (without any more additional payments to principal). I would love to get a better rate but if we did another 30 yr loan that would mean another 13 years of mortgage payments. Does that make sense?

But I do agree that the difference in interest rates between what you are paying now vs w/refinance is not worth all the costs involved.

I just saw something on Suze Orman the other day - someone called in w/ a similar question and she pointed out that it's useless if you don't change your spending habits, as you'll just run those cards up again. Also - she said you can't get rid of certain kinds of debt in a bankrupty, so rolling loans into your house loan is a bad idea because now if something were to happen where you would want to declare bankruptcy, all that debt is now tied in with your house payment & you can't get rid of it; whereas if it were left on the cards, it could be gotten rid of.

Your interest rate is REALLY low right now. I wouldn't start over. I'd just work on those bills the old fashioned way.

We are only 3 years into our 30 yr loan so restarting the clock really doesn't play a huge role into it. There are no early termination penalty on either loan. Refinancing would cost $2000 which was build into the $114k refinance and the appraisal fee is $300. This is fixed rate but I will check on what the final APR is.

Thanks for your thoughts on the situation.

Don't forget too, unless an appraisal was officially done, that number ($114) is very subject to change. To get that number they can do a general search in your area and pull up some comps. But it is never firm until your credit is run and an appraisal is done (and the appraisal is usually an outside source and not paid from closing, most appraisal companies nowadays want to be paid up front b/c too many loans fall through). HTH.

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I agree, I wouldn't do anything until the issue with the child support amount is resolved. You don't want to have a pending legal action against you when you're applying for a re-fi and you'll want to know how much child support will be before you agree to a new house payment.

I'm also very skeptical of loan officers who tell you they can let you borrow X-amount of money and even give you 'a little left over'. Many years ago we re-fi'ed and the bank continually refused to listen that we didn't want money back. We ended up with a loan that was $10,000 too high (they were so happy to hand us the check) and we were too stupid to walk away from signing the papers.

Lastly, because your daughter is almost 18, I'd be very careful about signing papers to give custody to the state just so she will get Medicaid. They will continue to charge you child support until she is 19, yet if she signed up for Medicaid the day after her birthday, the state would cover her without making you pay. Perhaps you need to get some legal advice. Additionally, a guardianship for a incompacitated adult isn't horribly expensive to get - you may even be able to do it yourself.

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Cookie2 we will be signing over custody so that the state pays for her treatment. Our insurance company will only pay the 1st 90 days. Then it will be our responsibility to pay for the rest. Treatment is $470 a day and will be an estimated 9 months. Unfortunately there is no way we could pay this out of pocket. The only reason we are sending her through treatment is because everything else we have tried has failed and this is a last effort before she turns 18 and then could be tried as an adult in court. (Worse case scenario but very well a possibility). We have went through all the treatment and medical professionals that have been recommended along with a few that weren't. It is in her best interest to go through treatment both on a medical level and the juvenille justice level.

I do have a call into the dept. of human services because in some states there is a mental health waiver that may cover treatment. I am praying that ND has this but so far I haven't found anything to give me hope. I also have talked with several lawyers in regards to guardianship and I will need the help legally to get this done. My hands feel so tied about everything.

Oh, it is that kind of behavioral issues. You didn't ask my opinion on this, but I have some experience in this matter. Personally, I'd let her be tried as an adult.

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