My husband and I have about $15k in credit card debt, and we owe about $38k on a 2nd mortgage and about $250k on our 1st mortgage. We can't really afford to pay more than the minimum payments, but we'd love to reduce our debt and monthly payments. Hubby wants to do a cash-out refinance for however much we can get to pay off as much debt as we can. (Our house will likely appraise for about $385k.) However, I've read that it's not a good idea to convert an unsecured debt (e.g., credit card) to a secured debt (e.g., mortgage), so I'd like to make sure we're considering all of our options.  What's the best way to approach this situation?


@Suebear42, thank you for your inquiry about refinancing. One of the benefits of your USAA membership is free, expert advice from our licensed financial advisors. I welcome you to contact one of our financial advisors at 210-531-8722 to discuss your options. Our advisors are available Monday through Friday from 7:30 a.m. until 10:00 p.m. CT and on Saturdays from 8:00 a.m. until 5:00 p.m. CT. ~DC


Sure you can refinance, and if your home appraises for 385k, you will be able to consolidate all 3 of your debts into a single mortgage payment; However, you are not "paying off" any debt, instead you will be increasing your total debt because of the fees that you will incur to refinance, and you will probably just go back to racking up a new balance on your "paid off" credit cards because the lower total payments on your debt will make you feel like you can afford to make payments on other new purchases.  This is the trap many people fall into, they look to get out of their money problems by reducing their payments through debt consolidation, rather than going through the hardship of financial counseling, making a budget, and reducing their consumption.  Personally, I can't stand Dave Ramsey, but you should look into going through his "financial peace" class before you refinance your home.  Many churches will offer the class at a reduced rate, or even at no charge, and it sounds like you and your husband would really benefit from the training.  Best of luck to you!