Should I refinance my VA loan to pay off $46k in debt?

C

Cryptogalaxy33

New Member
I'm sitting here, carr ying $46k of debt, and I keep getting offers to refinance my home—a place I've had for six years now through a VA loan. The idea of taking money out to pay off my bills feels like a lifeline, but I'm not sure. If I go through with it, I think I’d cancel all my credit cards.
 
Honestly, this really adds up only if you can snag a better refinance rate and the new monthly payment is actually lower than what you're paying now. Just do what feels right for you, ya know?
 
I want to share something with you because I’ve been in your shoes. When you take this step, it might feel like the easy way out and in a way, it is. But here’s the truth: there’s a good chance you won’t change the habits that got you here in the first place. I know this because I’ve lived it. I ended up taking out a HELOC, and before I knew it, the credit cards were maxed out again. You mentioned canceling the cards, and that’s a great step, but please be careful about using your house to pay off unsecured debt. I hope you can learn from my experience.
 
I truly believe that now isn't the right moment to refinance. Take some time to list out all your debts and work on gaining control over your spending. You've got this you can do it without refinancing.
 
Just to give you some context, my ex and I bought a house (now his) using a VA loan seven years ago with a rate under 3%. I recently got a mortgage on my own, and it’s just over 6%. The seller I’m buying from also got around 6%, and that’s with excellent credit and a 20% down payment. If you refinance and take out more money, your mortgage could more than double. Plus, you’d still need to qualify, but now with a less favorable debt to income ratio and a higher percentage of your credit being used.

On the other hand, you might qualify for a home equity line of credit, but I’d want to make sure my first mortgage isn’t affected. If you already own the home and plan to cancel your credit cards, you might consider a consolidation lo an that would essentially cancel your cards. Just make sure to check the loan fees and interest rate to see if it’s worth it.
 
Refinancing is generally not the most advantageous option, as it typically extends the mortgage term and results in higher overall interest payments. Additionally, refinancing often involves paying closing costs. It is important to carefully weigh these factors before deciding.
 
Six years ago, interest rates were much lower, so refinancing now at 6% instead of keeping your 3% rate doesn’t make much sense.

Instead of that, reach out to your credit card companies and ask if they can set you up with a hardship program they're often willing to help!
 
Absolutely not.
Never risk the house like that.

Close the cards now so you can't spend on them while paying off your debt.

Sell things,
get roommates,
work more,
and budget stricter.
 
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