Second Mortgage

The thing that matters most is what will be best for you knowing that you are moving into a new house in a few years or so.

A refinance to clean up credit makes alot of sense. The new rate is actually lower then what you have now. Even though you have a 6.5%, your second mortgage can probably be in the 8% or higher range.

So, interest alone is less with the new mortgage. Also, the main thing to look at is the paying credit cards over 30 years.

You may not want to opt for that. If you know you are going to move in few years. All you may do is tapping into your equity for a start, the same way you would if you sold your house and used your equity to pay the credit cards.

The thing to remember is that no one takes out a 30 year mortgage, and stays with it for the full 30 years!

The average homeowner sells or refinances a mortgage every 5-7 years. Also, how much are your credit cards? Lets say ten thousand dollars. Now is it really precise to say it will take 30 years to pay that $10 thousand in credit cards?

If you think about it, it will probably only take 2-3 years to have that $10 thousand paid off, so when someone says they dont want to extend credit cards over a 30 year mortgage, it doesn’t make any sense.

Also, to tie everything together. Even if you do pay more money, more interest now, and for the next few years until you move, you are doing it for a reason. To get your credit back up, so that your new house can qualify for a lower rate obviously makes paying a higher rate for over two years worth while.

Now you will have the critics say that it is not a good idea but the fact is everyone in America are in different situations financially. What makes sense for you may not make sense for someone else.

You need to concentrate on what your family needs are, for instance, your needs may be to clean up your credit so that you qualify for a better rate in the future. That is what matters!

Moreover, you may be able to get a lower rate then 6.95%. And most mortgage companies are a middle man, they have to charge extra fee’s in order to make a profit on a loan.

They also have to give you a higher rate then you qualify for in order to make profit as well (then investor they use will pay them to give you a higher rate then you actually qualify for)

Finaly, it is important to make sure you get the best deal out of it.