Hi everyone. I need some quick financial advice if anyone has time! Here it is in a nutshell: Our first mortgage is fixed at 6% and has a balance of $324,000. We have a HELOC with a current balance of $99,000 (prime +1% on this). Additional credit card debt of approximately $75,000 (yes, I know this is huge, and all cards will be destroyed after restructuring). We really need to lower what we pay out each month. My husband's industry has really suffered over the past couple years and income has cut in half. The credit card payments alone are staggering because they have now doubled, and in some cases, tripled the required monthly payments. Our credit is good, so that is not a problem -- it's just the large balances that have affected us.
On to my question: would we be better off doing a complete refinance and rolling everything together or simply doing a home equity loan and combining the HELOC balance and credit card balances? Our current first mtg is only 6%, so if we refinance we'd probably be around 6.875% right now. A refinance would allow us to do a 10-year I-O loan with a fixed rate and our required payments would be lower than they would if we keep the first mortgage as it is and just do a home equity loan (we've been quoted an 8.34% rate on the equity loan amortized over 30 years).
If you have any thoughts on whether I should do the equity loan or do a total refinance of everything, I would REALLY appreciate it. We have been preapproved on the equity loan already, and I've also chatted with the loan officer who placed our first mortgage (I know he has incentive for us to do a refinance since he will make lots more money).
Thank you for listening and for any advice you can offer.
Have a great day!