I just got a bank statement in the mail and I realized I have six more years to pay off about $30K on my HELOC. It’s a long story, but that’s not the original balance. It’s much more. One day when I’m in true confessions mode, I might post about it, but not now.
What really makes me cringe is that I have a 7/1 ARM and 4 years have passed. In 3 years I’m going to want to refinance and go through the rigamarole of getting a new appraisal and whatnot. Who knows? I might also have sold my condo by then too.
At any rate, I’ll have keep the adjustable rate change time horizon in mind in making financial plans for the next few years.
Why don’t I refinance right now?
1. My condo needs a lot of repair work. If I appraised it today, it wouldn’t go for as high as it could with the damage that still needs fixing.
2. I think I might be underwater so why go through this process if only to find out I can’t refinance for what I owe. (I am underwater on paper with advertised short sale units on the market. However, I’m not underwater per the county’s assessment of what actually got sold.)
3. I don’t think my credit score is high enough to warrant a truly outstanding rate. I’m carrying too high a balance on one single credit card. I’m thinking of balance transferring it all around, but it’s not really worth it mathematically to pay the higher interest and fees. I’m just working on paying it down.
4. Since the current market is doing so poorly, I’d rather make my priority to pay down my credit cards and fix what has to be done around the condo to get it ready to sell when things start to bounce back within the next 2 years. I’m thinking of selling in 2009 if the market seems to improve enough.
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I think you’re doing the smart thing by waiting to refinance your debt. The market might currently be in a downturn but the likelihood of it turning around before your HELOC is done is quite good. Sometimes keeping a few things at the status quo level is the best option.
I agree with you and Matt- not a bad idea to wait. You might want to find out your credit score anyway in preparation for refinancing. You mentioned you don’t think it’s very good. It is good to know what your score(s) is and any delinquent payments or defaults recorded against you. You can often dispute these.